Thursday, April 5, 2018
How can you determine cap rates for multifamily apartments across Indiana?
Capitalization (cap) rates are mostly used metric by which real estate investments are measured. This raises a question - how can you determine cap rates for multifamily apartments across Indiana? As with any complex topic, the answer is that it depends. This guy (Fruitful Investor) answer this question Why Multi Family is The SAFEST Real Estate Investment nicely in this video.. go and check it out.
Thursday, February 1, 2018
Interesting video on the "four square" method to calculate ROI on a rental
Here is a link to the post: https://capratecalculator.wordpress.com/2018/02/01/did-you-know-using-the-four-square-method-to-calculate-numbers-on-a-rental-property/
Another one related is this one :
"A quick description of Net Operating Income, Capitalization Rate, and Price - What they are, how they interact with each other, how to use them, etc. If I have made any mistakes, or omitted what seems like important relevant info then please message me or leave a comment. http://relevantproperties.com"
Someone said : I would add that the cap rate is not determined just by the area. It also depends on the quality of the tenant and terms of the lease. For example, if you have a bank as your tenant then it is unlikely they are going to default. The cap rate you use would be different if you had a new startup as your tenant as they are quite likely to default. For the building with a bank as a tenant the cap rate might be 8% and if the tenant was a startup then it might be 12%. This impacts the price even if the annual rent is the same. So for $50,000 NOI you can sell the building for $625,000 or (50,000/0.08) if bank is tenant. If startup is tenant then selling price is $416,666 or 50,000/0.12). The varying cap rate takes into account the risk. That is, there is less certainty that you will get the $50,000 if the tenant is the startup so you pay less for the income stream (the building).
Interesting take on it.
Another one related is this one :
"A quick description of Net Operating Income, Capitalization Rate, and Price - What they are, how they interact with each other, how to use them, etc. If I have made any mistakes, or omitted what seems like important relevant info then please message me or leave a comment. http://relevantproperties.com"
Someone said : I would add that the cap rate is not determined just by the area. It also depends on the quality of the tenant and terms of the lease. For example, if you have a bank as your tenant then it is unlikely they are going to default. The cap rate you use would be different if you had a new startup as your tenant as they are quite likely to default. For the building with a bank as a tenant the cap rate might be 8% and if the tenant was a startup then it might be 12%. This impacts the price even if the annual rent is the same. So for $50,000 NOI you can sell the building for $625,000 or (50,000/0.08) if bank is tenant. If startup is tenant then selling price is $416,666 or 50,000/0.12). The varying cap rate takes into account the risk. That is, there is less certainty that you will get the $50,000 if the tenant is the startup so you pay less for the income stream (the building).
Interesting take on it.
Thursday, January 4, 2018
Info Graphic about a Loaded Cap rate.
Cap rate calculations are not the most exciting subject in the world. But having well-made info graphics can help along the way. Check out this one! Loaded Cap Rate graphic.
Saturday, December 16, 2017
Check out this great video about cap rates!
As we have discussed before, there are different ways of getting the cap rate. This young lady does a nice job breaking it down. Check it out.
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