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Cap Rate, Cash-on-Cash, Yield, and GRM: the glossary Imnoba uses (and why)

The 4 metrics every investor needs to understand before comparing properties — explained with examples, no confusing formulas.

This guide is general information, not legal, tax, or immigration advice. Always confirm with a licensed professional before making decisions.

Cap Rate

This is the ANNUAL net operating income (rent minus operating expenses: tax, HOA, insurance, maintenance, vacancy, management) divided by the property's price. It does NOT include mortgage payments — it measures the property's own performance, as if you'd bought it in cash.

It's useful for COMPARING properties evenly, regardless of how each buyer decides to finance them.

Cash-on-Cash Return

This is the annual cash flow (after paying the mortgage) divided by the cash you actually put in out of pocket (down payment + closing costs). Unlike cap rate, it DOES account for financing — which is why two people buying the SAME property with a different down payment or interest rate get a different cash-on-cash return.

It's the most relevant metric if your question is 'how much is the money I actually put in earning?', rather than 'how does the property itself perform?'.

Gross Rental Yield

This is simply the GROSS annual rent (before any expenses) divided by the price. It's the simplest and quickest metric, but also the least precise — it doesn't reflect the hidden costs (tax, insurance, HOA) that can be significant in Florida.

GRM (Gross Rent Multiplier)

This is conceptually the inverse of yield: price divided by gross annual rent. A lower GRM generally indicates the property 'pays for itself' faster in terms of gross rent — useful as a quick comparison between similar properties in the same area.

See what your own numbers look like

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Frequently asked questions

Which metric should I look at first?

If you're financing the purchase, cash-on-cash return tends to be the most relevant since it reflects your actual return on the money you put in. If you're comparing properties without thinking about financing yet, cap rate is more useful because it's financing-independent.

Is a higher cap rate always better?

Not necessarily — a higher cap rate usually comes with more risk (less established areas, higher tenant turnover, more maintenance costs) or lower expected appreciation. It should be looked at alongside the rest of the analysis, not in isolation.

See real cap rate and yield data by zone →
Cap Rate, Cash-on-Cash, and Yield: how to read a real return | Imnoba