Gerald’s Real Estate Tip of the – Week of 11/1/16

Real Estate Tip

The Capitalization or Cap Rate for a property is the ratio between its net operating income (NOI) and the property’s value: Capitalization Rate = Net Operating Income/Value.

You can transpose the formula to solve for property value or net operating income: Property Value = Net Operating Income/Capitalization Rate Net Operating Income = Property Value*Capitalization Rate.