The benchmark means any reference point or a standard against which one may compare or measure things. It also means the mark cut by the surveyor on a building, pillar, or wall and this is used for future reference in terms of measuring the altitude and other points.
A benchmark is a standard for measuring or evaluating things. It may be used for evaluating and analyzing stocks, prices of assets, and so on. It is a reference point for measurements in various sectors. It could be a standardized aspect as well.
A benchmark in the real estate sector helps in buying property, while defining the standardized comparison parameters between revenues and costs. The real estate benchmarking practice helps in analyzing the financial attributes of any real estate unit or property. This means comparing prospective properties for investments against any pre-fixed measurement index or mechanism. Some of the benchmarks for real estate measurement include cash on cash return, gross rent multiplier, debt coverage ratio, profitability index, cash break even ratio, net cash flow, loan-to-value ratio, and the capitalization rate.
