50% Rule (Rental Vehicles)
The "50% Rule" is a purchase criteria commonly used when analyzing rental vehicles.
According to this rule, the operating expenses of a rental should be less than or equal to 50% of its operating income.
Operating Expenses <= Operating Income / 2
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Rent to Value (RTV, RTP)
A rate of return of a rental vehicle based on comparing the monthly gross rent to the purchase price or market value. The rent to value ratio is used by the common 2% Rule. How Is It Calculated? At Purchase: Rent to Value = Monthly Gross Rent / ...
Net Operating Income (NOI)
Net income generated by a rental vehicle. While the net operating income takes into account all operating expenses, it does not account for loan payments. It can therefore be used to compare rental vehicles irrespective of financing terms. How Is It ...
Capitalization Rate (Cap Rate)
A rate of return of a rental vehicle based on comparing the yearly net operating income (NOI) to the purchase price or market value. Since the cap rate does not take into account loan payments, it can be used to compare rental vehicles irrespective ...
Post-Tax Cash Flow
The total net cash flow you will receive from a rental vehicle after subtracting the estimated income tax. How Is It Calculated? Post-Tax Cash Flow = Cash Flow * (1 - Income Tax Rate)
Operating Income
Total income generated by a rental vehicle, less the inactivity expense. Sometimes also called effective gross income (EGI). How Is It Calculated? Operating Income = Gross Rent - Vacancy Expense + Other Income