“One of your most important calculations is your cap rate.” -Christina Suter
Today I am sharing with you 3 ways to calculate a cap rate. When investing in multi family properties, the cap rate is used to compare a property against another. The equation for one step is your net income divided by the purchase price. First you have to determine what your net income is by including in that what you pay for utilities, management, property taxes, insurance and maintenance. Your net income however does not include your mortgage. By using these three ways to calculate your cap rate, you will be able to compare properties and to determine the cash flow or appreciation of the property for the future.
Topics Covered in this episode:
- What is a cap rate
- How do you calculate a cap rate
- Why is it important to use cap rates in multi family investing
- What formula is needed to compare home prices
- Where should you use a cap rate
- What is not included in your net income
The Real Estate Breakthrough Show with Christina Suter is where we talk about the reality of real estate, the mindset you need and the tips and tricks to get you moving forward in investing. Join us every week and learn everything you need to know to invest in real estate education and create real wealth for a lifetime.
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