how to calculate cap rate
How to Calculate the Cap Rate. The cap rate should not be the only indicator a real estate investor uses to evaluate a property but it is a very quick and convenient indicator for visualizing the value of a piece of real estate in comparison to other potential real estate. How To Figure Cap Rate Real Estate Investing Rental Property Rental Property Investment Rental Property Management In practice the residual cap rate is usually estimated based on. . Residual cap rate is a commercial real estate term used to refer to the cap rate that an investment property commands upon sale. Lets say your comparable sold for 250000. You can base the price you want to ask for the property on this figure and. Now all you have to do is divide the net operating income by the cap rate. A 500000 property with a 75 cap rate would generate a net operating income of 37500. You should assign a percentage to the net income by adjusting the decimal sp...