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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Chris who wrote (6431)10/30/2002 12:38:56 AM
From: ConanRead Replies (1) of 306849
 
Chris,

I believe Cap rate is equal to the sum of the annual rental payments a property would generate divided by the cost to acquire the property. So if the property cost $1M and annual rental payments would equal $82,500 then you would have a 8.25% Cap rate. Most pros consider 15% the minimum cap rate for an investor to shoot for if you want to make money regardless of short term real estate trends. It is hard to find cap rates above 10% in markets like California.

Conan
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