..Capitalization Rate = Net Operating Income / Current Market Value (Sales Price) of the asset
Let's assume a man wants to buy an investment property worth $900,000. He expects that it will generate $125,000/year after the operating costs. Using the above formula, the cap rate will be:-
13.89% ($125,000 / $900,000 = 0.1389 = 13.89%)
Comments 0