Printable cheat sheet

Texas cap rate, NOI, and GRM cheat sheet

Built for Texas sales agent exam prep. Fence the NOI, pick the formula direction, and ignore financing distractors before you calculate.

Cap rateNOI / Value

Use annual net operating income and the property value or sale price stated in the question.

ValueNOI / Cap rate

Convert the cap rate to a decimal first. Use 8% as 0.08, not 8.

NOIValue x Cap rate

Use this when the question gives value and cap rate but asks for annual net operating income.

GRMValue / Gross rent

GRM uses gross rent, not NOI. Keep it separate from cap rate.

Inside NOIIncome - vacancy - operating expenses

Rental income, vacancy, repairs, insurance, property taxes, management, and owner-paid utilities belong here.

Outside NOIFinancing stays out

Mortgage payment, down payment, debt service, depreciation, and owner income taxes stay outside cap-rate NOI.

The NOI Fence

Start with annual rental income or other operating income.
Subtract vacancy and collection loss if the stem gives it.
Subtract operating expenses such as repairs, insurance, management, property taxes, and owner-paid utilities.
Keep mortgage payments, down payment, debt service, depreciation, and owner income taxes outside NOI.
Use the value, sale price, or current appraised value stated in the question.

Multi-step vacancy$96,000 rent, $6,000 vacancy loss, $32,000 operating expenses, $800,000 value

$96,000 - $6,000 - $32,000 = $58,000 NOI. $58,000 / $800,000 = 0.0725 = 7.25%.

Find value$72,000 NOI at an 8% cap rate

$72,000 / 0.08 = $900,000.

Mortgage distractor$60,000 NOI, $750,000 value, $4,000 monthly mortgage payment

Ignore the mortgage payment. $60,000 / $750,000 = 0.08 = 8%.

Find NOI$650,000 value at a 7% cap rate

$650,000 x 0.07 = $45,500 NOI.

GRM$1,000,000 value and $125,000 annual gross rent

$1,000,000 / $125,000 = 8.0 GRM. Use gross rent, not NOI.