What each figure means here

GPI

Gross potential income

Sum of contract rents × 12

Every unit at its stated rent for twelve months, as though nothing were vacant and everybody paid. It is a ceiling, not a forecast. We state it because the deductions below it are the interesting part.

EGI

Effective gross income

GPI − vacancy and credit loss + other income

Gross potential income, less vacancy and credit loss, plus other income the building actually earns — laundry, parking, storage. This is the money that arrives.

NOI

Net operating income

EGI − operating expenses

Effective gross income less operating expenses. On this site that means before debt service, before income tax, before depreciation, and before capital reserves — reserves are real, and we show them, but on their own line below net operating income rather than buried inside it. Two buildings quoted on different NOI definitions are not comparable, which is why ours is written down.

Cap rate

Capitalisation rate

NOI ÷ price

Net operating income divided by price. It is a quotient, not a grade: it compresses the lease, the condition and the town into one number and hides all three. We label every cap rate in-place or pro forma, and we do not state one without the net operating income definition above.

Cash-on-cash

Cash-on-cash return

(NOI − annual debt service) ÷ total cash invested

Cash left after debt service, divided by the cash you actually put in — down payment, closing costs and any day-one capital. It is the first number that knows what your loan costs. We strike it before capital reserves and show the reserve on its own line, so funding it stays a decision you can see rather than an adjustment buried in the return.

DSCR

Debt service coverage ratio

NOI ÷ annual debt service

Net operating income divided by annual debt service. Below 1.00 the building does not pay its own loan. Most lenders want 1.20 to 1.25, and this is usually the constraint that sets the price — not the cap rate.