How to Calculate Cap Rate for Rental Property Analysis

In this episode of The Real Estate Investing Podcast, Lucas and Luna dive deep into the capitalization rate — or cap rate — a fundamental metric for evaluating rental property investments. Using a concrete example of a duplex in Cleveland, Ohio, Lucas walks through the math: net operating income divided by purchase price. They discuss why a 7.5 percent cap rate might signal a good deal in one market but a warning sign in another, and how to adjust for interest rates and property condition. Luna challenges Lucas on the common mistake of using asking price instead of actual cost, and they explore the difference between pro forma cap rates and trailing cap rates. By the end, listeners will understand how to calculate cap rate accurately, avoid inflated numbers from sellers, and use it alongside cash-on-cash return for smarter decisions. A must-listen for anyone serious about rental property analysis. #CapRate #RentalProperty #RealEstateInvesting #NetOperatingIncome #PropertyAnalysis #Duplex #Cleveland #Finance #Business #CashFlow #RealEstateMath #InvestmentStrategy #Landlord #PropertyEvaluation #ProForma #CashOnCash #FexingoBusiness #BusinessPodcast Keep every episode free: buymeacoffee.com/fexingo