Cap Rate stands for capitalization rate and is used in commercial property valuations. Cap Rate is simply the net operating income (income minus expenses) divided by the purchase price or appraised value.
“There must be some mistake” Rick, my client said to me. “How can my property only be worth $5.25 Million when the exact same property 4 miles away sold for $5.6 million last year.” In fact, he was right on. He had gotten the blue prints to build his new 36 unit multifamily complex from his brother-in-law who had built and sold the exact same design last year. Rick’s apartment... more