Cap Rate, Tell Me More
Could someone explain how we get the cap rate, normally it is 10% right?, but how does one find out what it is?
Can it be used for mobile home parks that are set up as rentals? Use it to determine value, help evaulate the value of the park???
Any help will be greatly anticipated, thanks
Patrick
Cap Rate is a ratio used to estimate the value of any income producing properties . It is the net operating income, divided by the sales price or value of the property as a percentage .
Cap Rate = NOI / Value (for the math guru)
Hibby put out a good article explaining all of this
Here
Or if you prefer a simple search on the web for cap rates will give you many in depth articles on it. It can be used for any type of investment that has a cash flow.
Kyle