Updated over 9 years ago on . Most recent reply
Are improvements calculated in cap rate if it's tied to the loan?
Hello everyone, I'm trying to do a detailed analysis on a Multi family property we own. Specifically I am looking to calculate the cap rate accurately. I understand that NOI/purchase price=Cap rate but my question is what if the note has an additional amount for repairs included? The property was purchased for $510k however the bank loaned an additional $90k and included the closing cost so the actual amount of the loan is $606,687. Would the cap rate be based of the loan value or just the actual purchase price of $510k? Thanks for your help.
-Joshua M.