# Cap rate formula - Posted by Bert G

#1

Posted by Ed Garcia on February 22, 1999 at 11:12:49:

Bert:

Go to http://www.realdata.com/realdata-caprate.htm.
This will give you the information you want.

Ed Garcia

#2

Cap rate formula - Posted by Bert G

Posted by Bert G on February 22, 1999 at 10:45:54:

OK, I’m sure this is explained in an article somewhere here, but I’m having trouble finding it. Simple question. Can someone please give me the formula to determine cap rate?

Thank you
BG

#3

Re: Cap rate formula - Posted by Sean

Posted by Sean on February 22, 1999 at 18:38:56:

Supposedly it’s the rate of return you’d get on your money if you paid all cash for the unit. Like if it says asking \$200,000. 9% cap rate you’d expect that if you bought it for \$200,000 you’d make 9% of that a year or \$18,000.

Sometimes their numbers are a little hokey, tho. Always do your own “due diligence” investigation.

#4

Re: Cap rate formula - Posted by Jim Beavens

Posted by Jim Beavens on February 22, 1999 at 14:53:19:

I posted an answer to this question a while ago, and J.P. was kind enough to place it in the Money-Making Ideas section of this web site. See the article titled, “Crash course in commercial real estate terms.”

#5

Re: Cap rate formula - Posted by Roy

Posted by Roy on February 22, 1999 at 12:01:24:

Check out the article on comparable sales at the California Homes website (http://californiahomes.webjump.com - look in the Investor section). This contains a good explanation of cap rates.