Cap rate /COC Determination

Cap rate /COC Determination

Mason City, IA · Member since 2015 · 27 posts · 7 votes

Hi All,

I have a simple/stupid question. Do you factor in property management fee as part of your formula to calculate Cap rate?

When I was searching for properties, the listing agent's calculated Cap rate almost never factor in property management fee and I have always include it in my calculation. My agent would send me the properties that "may fit" my criteria; however, it actually does not. My offer price often is significantly lower than they have anticipated.  

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  • Tim SwierczekPro Member
    Lender · White Bear Township, MN · Member since 2016 · 1k+ posts · 1k+ votes
    8y

    @Mark Hong A banker would consider the management fee so you should too, especially since there is no chance you will manage the property.

  • Mason City, IA · Member since 2015 · 27 posts · 7 votes
    8y

    @Tim Swierczek Thx for the answer, I will just have to make sure my agent is on the same page. 

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