Apartment Building Appraisals

By Terry Painter, Mortgage Banker

Member of the Forbes Real Estate Council

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.

March 30, 2014

If you are just starting out in commercial real estate and want to function in this world, you need to become fluent in and have an understanding of capitalization rate, also known as cap rate. This is because commercial realtors, commercial appraisers, and commercial lenders all use cap rate to determine the accurate current value of a commercial property. 

Published July 9, 2010 

Investing in an apartment is a tried-and-true technique for improving one’s financial portfolio. But apartment investing has certain risks attached to it. Maintaining your apartments in good condition and, at the same time, having these properties rented can be quite stressful. If you have a great location, and your market is good, there will be plenty of renters coming your way. If you are brave enough to face all these risks, the rewards of investing in apartment buildings will come in multitude.

Published January 28, 2012

Commercial loans have historically been made foremost to the property, whereas residential loans are made primarily to the borrower. For a commercial loan, the net operating income of the property is foremost in the commercial lender’s mind, then the condition and location of the property. However, since the recession started, the quality of the borrower is just as important as the merits of the property.