Cap Rate HELP, Thanks Biggerpockets!

[John D.]

Hey BiggerPockets, I just have a quick question. Let's say I put a 400k down payment on 2 million dollar commercial building. What would my cap rate be like? Or what should I be expecting as my annual return? Also Let's pretend this 2 million dollar building has a cap rate of 7.7%

[Immanuel Sibero]

@John D.

If you pay $2M for a building valued at $2M at 7.7 cap, then your cap rate is... well... 7.7 (i.e. never had to say it this way but...)

Your down payment would not affect cap rate, it would however affect annual return.

Cheers... Immanuel