What is Cap Rate?

how do we calculate Cap Rate?
In Selling Property - Asked by Decheng Z. - Sep 27, 2017
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Answer(s)

Dennis G.
Broker/Agent
Pasco, WA

This is Gross Income - all expenses = net income / purchase price of the property. I hope this helps.

Sep 27, 2017
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Michael R.
Broker/Agent
Miami Beach, FL

While Dennis answer is correct, the problem we find in the industry is the lack of disclosure of expenses. I am in Southern Florida so that the perspective I will use:
Expenses I see on Multi-Family properties missing or very low stated are Insurance, Water, Trash and code violations that have not been paid. it's in that order, be surprised how many times I don't see the insurance on the reports( real insurance for example flood, wind, storm, and umbrella. Water and Trash I discover different on due diligence and code violation from knocking on the city.

Sep 28, 2017
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Dennis G.
Broker/Agent
Pasco, WA

While Michael's answer is correct, what i see missing most often is any allowance for a vacancy rate and property management.

Sep 30, 2017
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