FORMULAS

1. Gross Annual Income:

All annual revenue received from the rental income plus any miscellaneous income.

(example: a laundry room)

2. Annual Expenses:

Taxes, insurance, maintenance, management, reserve for maintenance, advertising,

telephone, vacancies.

3. Net Operating Income: (N.O.I)

The gross annual income (total) less total annual expenses
(not counting debt service).

4. Cap Rate:
The net annual operating income (N.O.I.) divided by the purchase price.

5. Return on Investment:

The gross annual income (N.O.I.) minus gross annual expenses

(including debt service) divided by down payment (or equity).

6. Gross Rent Multiplier:
The purchase price divided by the gross annual income.

7. Gross Lease:

The tenant pays all of the expenses for the building.

8. Net Lease:
     The tenant agrees to pay, in addition to the rent, expenses such as taxes, insurance,
     maintenance and other costs of the leased property.

9. NN Lease (double net lease):

     The landlord and tenant share expenses of operating the building, on various
     arrangements. Usually the landlord pays maintenance of the roof, walls (structure),
     taxes, insurance. The tenant pays utilities, maintenance of the interior space and
     landscaping.

10. NNN Lease (triple net lease):

The landlord pays all expenses in the maintenance and operation of the building
including roof, exterior and interior walls, taxes, insurance, utilities and landscaping.