Income - Expense / Purchase Price
Income: $1400 x 12 = $16,800
Expense: $400 x 12 = $4800
$12,000 / $110k = 10.9%
You do not include debt service when dealing with the CAP rate. How is the location? Keep your down low & you should have a nice Cash on Cash return, assuming the property doesn’t have a lot of deferred maintenance that needs to be done now.
Have you checked what CAP rates are doing in your area?
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