Is Cap Rate based on ARV or Cash In?
Hi everyone,
So I understand the Cap Rate concept of annual NOI / value = Cap Rate. However, what I cannot seem to find is an exact description of what "value" I need to use. Should this be the ARV / Comp value of the property or the actual amount I put into the property (my cash & loans combined)? For example, I have a duplex I own for $60k after purchase and rehab, and my Realtor ran comps and shows it's value as $80k. Do I use the $60k or $80k to figure an accurate Cap Rate?