What’s included in ‘Net Income’ for Cap Rate analysis?
Hello,
I’m trying to determine a price for a multifamily apartment building I’m selling. The way I’m doing this is taking the net income and determining a possible sales price using the cap rate.
Normally to determine net income I start with the gross income and subtract taxes, insurance, and maintenance. However in this case I pay the electricity for the tenants. Should I also subtract my electrical costs from my gross income to determine net income? What is the common methodology of figuring out net income given I pay electricity?
Thanks!
Robert.