8 Financial Ratios Every Smart Investor Must Master | Ep 93

(Watch the YouTube video of this episode here)

 

In this episode of the Furlo Capital Real Estate Podcast, we dive into the critical role that math plays in evaluating real estate investments. Whether you're a math enthusiast or not, this episode is informative and essential for anyone looking to invest wisely. By understanding these ratios, you can make better investment decisions and build wealth while improving housing. Stay tuned for next week's episode where we discuss a real-life deal and apply these ratios hands-on.

// Key Moments

00:00 Intro

01:52 Understanding Ratios in Business

03:08 Gross Margin Percentage

04:16 Net Operating Margin Percentage

06:00 Exploring Leverage in Real Estate

10:43 Understanding Net Operating Income and Debt Payment Ratios

11:50 Exploring Debt to Equity Ratios

14:31 Return on Equity: Measuring Profitability

16:08 The Importance of Ratios in Real Estate Investment19:15 Conclusion and Teaser for Next Episode

// 7 Key Lessons

Don’t just count dollars, measure margins: Gross margin % and net operating margin % reveal if revenue actually translates into profit.

Use ratios as X-rays for investments: Ratios let you see beneath the flashy “big numbers” and spot whether a deal is truly healthy.

Leverage is a double-edged sword: Debt can amplify returns—but small dips in rent or sales can also cut deeply into profits.

Keep your reserves liquid, not locked in drywall: Having only enough cash for a down payment leaves you “house rich, cash poor.” Keep 3–6 months of reserves.

Track return on equity, not just cash flow: As equity grows, ROE can quietly shrink. Know when to refinance or reinvest elsewhere.

Beware the opportunity cost trap: A property might cash flow “positive,” but if the returns are tiny compared to your investment, your money could work harder elsewhere.

Relationships still matter more than ratios: At the end of the day, many investors care more about who they’re investing with than the exact numbers.

// Let's build your wealth and improve housing, together.

I spent 12 years as a data scientist at HP and purchased $5M worth of real estate over 15 years using my own money. Now, I'm partnering with busy professionals to diversify their investments and generate passive income through real estate syndications and short-term flips—without dealing with tenants, toilets, or tantrums.

At Furlo Capital, we believe real estate isn't just a transaction; it's a partnership. Our value-add approach creates win-win situations where residents thrive, and investors build wealth. We're not just in this to make money—we want to make a difference.If you're ready to diversify from stock market volatility and want reliable, steady returns, let's build your wealth and improve housing, together.

Want to dive deeper into my investing thesis and strategy?

👉 Learn more: https://furlo.com

Curious about the critical questions to ask before investing?

👉 Get my 196-question due diligence vault: https://furlo.com/good-deals-only-ebook

// DisclaimerPlease note that investing in private placement securities entails a high degree of risk, including illiquidity of the investment and loss of principal. Please refer to the subscription agreement for a discussion of risk factors.