Tag: Learn how to accurately calculate the capitalization rate a key metric in commercial real estate investing. This guide explains the cap rate formula its uses and its limitations.
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How To Calculate Cap Rate
The capitalization rate, or “cap rate,” is one of the most fundamental metrics used to assess the value and return potential of a commercial real estate investment. It provides a snapshot of a property’s yield in a single percentage, facilitating quick comparisons across different assets and markets. The Cap Rate Formula The standard formula for…