AAA320 Listener Question: What is Cap Rate?

In this podcast episode, you will learn: Cap rate means how you capitalize after all of the expenses (rate at which you get your money back) Ratio is purchase price and divide it by NOI Cap rate is important because commercial multifamily properties are valued by cap rates instead of their comps. It is a function of (buyers perception of) risk. Buyers are willing to pay more if they see area is safe and building is new. Age of propertiy, Credit worthiness of current tenants Diversity of Tenants Length of Leases of current tenants Underlying economy in the area Net Operating Income (NOI) - Gross potential rent minus expenses (except mortgage) Side note: It is always good to assume expenses (for B and C properties) are a ratio of 50% To attend Rod Khleif's Bootcamp in Los Angeles, visit (https://RodInLosAngeles.com) Use the code AdamAdmas for $100 off your tickets To connect with Damion Lupo, text eQRP to 72000 And please go to iTunes to leave us a rating and write a review. Each review helps us reach a larger audience with your episode. https://podcasts.apple.com/us/podcast/creative-real-estate-podcast/id1285094279