Calculating Cap Rate for Rental Properties: A Step-by-Step Guide
Learn how to calculate cap rate on rental properties in Surprise.
James walks you through, step-by-step, how to calculate capitalization rate (cap rate) on rental properties in Surprise including all the sub-calculations including Gross Potential Income (GPI), Gross Operating Income (GOI), Operating Expenses (OpEx), and Net Operating Income (NOI). And, where to get every number you'll need to do the calculations yourself.
Find out what a typical cap rate might be including some historical cap rates for a variety of investment types.
Learn how cap rate is similar to Cash on Cash Return on Investment and, more importantly, how it is different.
Plus, James will show you how to have The World's Greatest Real Estate Deal Analysis Spreadsheet™ (free spreadsheet download) do the cap rate calculation for you.
See the cap rate calculation with the newest spreadsheet: James's Visual Cap Rate Calculator for Rental Property™ and the Improve Cap Rate Focuser™ to see where to focus your energy to improve cap rate with the least effort. Or, see another new spreadsheet: Rental Portfolio Cap Rates for tracking cap rates on properties in your portfolio.
Watch the video version of this class:
Resources Mentioned In Class
- Return Quadrants™ - Learn about all the different Return Quadrants™ and how we use them to show you how a property is performing.
- Surprise, Arizona Real Estate Modeling - Click on the link to copy any Scenario for Surprise, Arizona to have James walk you through any calculation including Cap Rate for any property used in the modeling.