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what is a good cap rate for rental property

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Cap rates are expressed in percentages and are returns for a single point. They can be used to assess an investment property or to compare properties.\n

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This same cap rate formula can be used to estimate the building's value based on its NOI. If you know that the property generates $500,000 in NOI, and that the appropriate cap rate (i.e. unlevered return) is 5% for a comparable project in the market, then you can divide $500,000 by 5 to get a $10 million value. The same project could be worth only $8.3 million if the market cap rate is 6%. This illustrates how changing return expectations in the market (in this instance, the cap rate), can cause implied real property values to fluctuate as discussed further below.

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whats a good cap rate for rental property

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Cap rates can be used to determine which investment is more risky or safer. A lower cap rate generally means that it is safer or less risky to invest, while a higher rate can mean more risk.

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what is a good cap rate for a rental property

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Cap rates can often be compared with a coupon on a bond because they allow you to express payment in a percentage of an asset's value.

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what is a good cap rate \n

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Real estate investing's \"cap rate\" is the unlevered return on an asset that is based on its annual net operational income (NOI).

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good cap rate for rental property

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When evaluating the performance or potential real estate investment, the cap rate (or capitalization rate) is the most frequently used return metrics.

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whats a good cap rate for a rental property \n

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A cap rate can be calculated by simply dividing the annual NOI by the market value. A property worth $10,000,000 and generating $500,000 in NOI would have an annual cap rate of 5%.

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