CRE Terminology & Key Metrics
The vocabulary and formulas every CRE investor must know cold
A hands-on tour of the CRE metrics that drive every deal: cap rate, NOI, DSCR, LTV, cash-on-cash, IRR, equity multiple, and more. You'll learn not just the formulas but when each metric matters, how they relate to each other, and the pitfalls that trip up new investors.
Download the CRE Terminology & Key Metrics Workbook
Printable PDF with exercises, worksheets, and fill-in notes designed to go alongside every lesson in this course.
What you'll learn
- Calculate and interpret cap rate, NOI, GRM, DSCR, LTV, and loan constant
- Distinguish between cash-on-cash return, IRR, and equity multiple — and know when to use each
- Read a broker's offering memorandum (OM) and spot inflated numbers
- Understand how operating expenses flow from gross income to NOI
- Apply each metric to a real example NNN deal from start to finish
Lessons
- 01
Cap Rate — The Single Most Important Number in CRE
The capitalization rate explained from scratch — the formula, the intuition, when to use it, when it lies, and how brokers and investors actually think about cap rates.
15 min - 02
Net Operating Income (NOI) — The Number That Drives Everything
NOI is the numerator of every valuation formula in CRE. Learn exactly how to calculate it, what belongs in it, what doesn't, and how sellers inflate it.
15 min - 03
Cash-on-Cash Return — The Number You Actually Care About
The most practical return metric in CRE, how it differs from cap rate, how leverage changes it, and the pitfalls of using it alone.
11 min - 04
DSCR and LTV — The Two Numbers Your Lender Cares About
Debt service coverage ratio and loan-to-value ratio explained — the two metrics every commercial lender uses to size your loan, plus debt yield as the third modern check.
13 min - 05
IRR and Equity Multiple — Measuring Total Return Over a Hold
Internal rate of return and equity multiple, the two metrics institutional investors live by. What they mean, how they differ, and when each one matters.
13 min - 06
GRM, LTC, Loan Constant, and Other Key Metrics
The rest of the CRE vocabulary — gross rent multiplier, loan-to-cost, loan constant, expense ratio, and the other smaller metrics you'll hear every week.
10 min - 07
Putting It All Together — A Full NNN Deal Walkthrough
A complete worked example applying every metric from this course to a real-world NNN retail deal, from listing to closing math.
16 min
Up next — Course 03
Reading CRE Financial Statements
Decode rent rolls, T-12s, and operating statements like a broker