1.Get the recent sold price of an income property, such as an apartment complex.
Example: Six unit apartment project sold for $300,000
2.For that same apartment project, determine the net operating income, or the net rentals realized by the owners.
Example: The rental income after expenses (net) is $24,000
3.Divide the net operating income by the sale price to get cap rate.
Example: $24,000 / $300,000 = .08 or 8% (The Capitalization Rate)
Apr 28, 2009