Gerald’s Real Estate Tip of the – Week of 9/8/20

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