What’s a good cap rate for investment properties?

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  • Carrollton, TX · Member since 2015 · 415 posts · 371 votes
    9y

    @Peter Abualzolof

    ...If you, however, are financing a purchase (through a bank loan, let’s say), you will need to include the annual cost of financing your property as an operating expense...

    The above is a quote from the blog. Annual cost of financing a property (i.e. interest expense) should not be included in NOI as it is not an "operating" expense. Interest expense is an expenditure related to the capital structure of the a rental business, not the operation of said business.

    Now if you are in the business of lending and borrowing money, then that's a different story. In this case, interest expense would be an "operating" expense.

    Cheers... Immanuel

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