CAP Rate Question

Posted in Creative Real Estate Discussions
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  • Anonymous
    October 17, 2007 at 2:16 am
    Anonymous

    I don’t have much of a need for CAP Rate calculations in my real estate business.

    I’ve been told many times how to figure it out but I don’t remember how.

    If I’m selling 25 single family homes for $1,051,700 and the monthly income is $16,895

    What is the CAP Rate? How do I calculate it?

    Thanks for your help

    Jackie

    Bill St Clair
    October 19, 2007 at 1:24 am
    Bill St Clair

    Jackie

    I found this answer on yahoo.

    determine the net operating income, or the net rentals realized by the owners.
    Example: The rental income after expenses (net) is $24,000

    Divide the net operating income by the sale price to get cap rate.
    Example: $24,000 / $300,000 = .08 or 8% (The Capitalization Rate)

    Bill St.Clair

    Anonymous
    October 19, 2007 at 10:50 am
    Anonymous

    Thanks Bill!

    See you next week

    Jackie

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