Through the CAP Rate Analysis for buy & hold.

proft and or loss year to date is not much value, it's the honor system... Prior year IRS filed return is useful in determining rents you might recover (not during covid though) and all the expenses from a to z. No owner will have the same expenses as repairs vary year to year and so do the occasional bad tenant who wrecks things. CAP rate will help a buyer determine if they can make money. Compare market rents to principle interest taxes and insurance with a 25 percent haircut is another method

Not much for residential, however for our commercial and timberland investments it is important.

Return on investment or ROI is a main player dynamic in income property and general investment. Where does one park money according to risk and return or whether it requires low, medium or high maintenace as well as if it is accessible (liquid) or have cash flow. Lets not forget write-offs as well. In the end you keep score two ways: Profit & loss + or - risk and end result

Eddy,

It is rarely used in residential, it is used in commercial real estate and when someone is making an investment.  And the rest of the members have given you an answer.  A

Here's a video https://www.youtube.com/watch?v=701mhCJJYOM&list=UUCq4iOnYvMwoxfHvySgoEkg&index=6&t=0s

I think this is the formula you are asking about.  Good luck.

It allows us to see the Net Income which will service the Mortgage and help Appraisers arrive at a Value .

 What Ken Jones  said

You have some good comments here. 

I wish you all the best with your real estate studies. 

Kenneth J. Jones, Broker of Record has you headed in the right direction.