Last episode, we established the fundamental truth: real estate investing is a language. If you don’t speak it, you’re at a massive disadvantage, and that’s why you need an Investors Roadmap. Now, it’s time to apply that language to a proven system for success. A random list of terms is useless without a roadmap. The PRIME framework is that roadmap.
In this following episode of our series on the 5-Minute PRIME Podcast, host Martin Maxwell shows you how the ten most critical investing terms fit directly into the Research and Invest phases of the PRIME framework. This isn’t just a vocabulary lesson; it’s a strategic guide to using the right tool at the right time to find, fund, and finalize a profitable deal.
Tune in to learn:
- The ‘Research’ Phase Toolkit: How to use NOI, Cap Rate, Cash-on-Cash Return, ARV, and Equity to filter hundreds of listings down to one winning property and craft a powerful business plan. your Investors Roadmap in action.
- The ‘Invest’ Phase Toolkit: How to speak the lender’s language with LTV, DTI, and DSCR, and how to use Contingencies and Seller Concessions to negotiate and close with confidence. another step in the Investors Roadmap.
- A Sequential Process: Understand how each term builds on the last, guiding you logically from initial analysis to the closing table, just as the Investors Roadmap is designed to do.
- PRIME in Action: See how this structured approach turns abstract knowledge into a repeatable process for building your portfolio, following the steps of an Investors Roadmap.
Are you ready to stop guessing and start executing? Subscribe now to learn how to apply the language of wealth to a framework for success and let the Investors Roadmap guide you.
Listen to 5-Minute PRIME podcast Now!
Play on your Favorite Podcast Platform
Show Notes: Investors Roadmap
Key Takeaways
- Framework is Key: Real estate investing is a language, and the PRIME Framework (Prepare, Research, Invest, Manage, Expand) provides the structure to apply it effectively.
- Process Over Definitions: Knowing where a term fits in your investment process is what separates professionals from amateurs.
- The Research Phase is for Filtering: Use the “Deal Evaluation Trio” (NOI, Cap Rate, Cash-on-Cash Return) to quickly vet potential properties. If a deal passes, use “Value-Add Metrics” (ARV, Equity) to build your business plan.
- The Invest Phase is for Execution: Secure funding by speaking the lender’s language with the “Financing Foundation” trio (LTV, DTI, DSCR). Protect your capital and improve returns at the negotiating table with “Negotiator’s Levers” (Contingencies, Seller Concessions).
- Contingencies are Non-Negotiable: A deal without contingencies isn’t a deal; it’s a gamble. Always use them to protect your capital.
- Follow the Sequence: Master the logical flow from high-level filtering (Research) to deal execution (Invest) to become a systematic and confident investor.
Action Step:
- Find a rental listing on Zillow, Redfin, or your MLS.
- Calculate NOI = Income – Expenses. Example: $21,600 rent – $9,160 expenses = $12,440 NOI.
- Estimate Cap Rate = NOI ÷ Price. Example: $12,440 ÷ $220,000 = 5.65%.
- Project Cash-on-Cash Return = Cash Flow ÷ Cash Invested. Example: $2,940 ÷ $55,000 = 5.3%.
- Decide if the property meets target benchmarks (positive NOI, Cap Rate above market average, CoC Return at least 8–12%).
Mentioned in This Episode
Episodes to Revisit:
Frameworks:
- The PRIME Framework: The five-stage playbook for investing: Prepare, Research, Invest, Manage, and Expand.
- The Deal Evaluation Trio: Net Operating Income (NOI), Capitalization Rate (Cap Rate), and Cash-on-Cash Return (CoC).
- The Financing Foundation Trio: Loan-to-Value (LTV), Debt-to-Income (DTI), and Debt Service Coverage Ratio (DSCR).
Challenge for Today:
- Pick one property under $300,000 in your market.
- Run the NOI and confirm it is at least $2,000–$3,000 positive annually.
- Check the Cap Rate and compare it to local averages (4–6% in appreciation markets, 6–8%+ in cash-flow markets).
- Calculate Cash-on-Cash Return and confirm it meets or exceeds 8–12%.
- Decide if the deal deserves deeper analysis or should be discarded.
