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How to Calculate Cap Rate (ARV)

Tuesday, February 22

Cap Rate (ARV) — Capitalization rate, or cap rate for short, is the ratio of NOI to property value. The lower the Cap Rate, the higher the property value, and the higher the Cap Rate the lower the property value, or the purchase price when buying. It’s used to compare different commercial prope...


How to Calculate Cap Rate (Purchase)

Monday, February 21

Cap Rate (Purchase) — Capitalization rate, or cap rate for short, is the ratio of NOI to property value. The lower the Cap Rate, the higher the property value, and the higher the Cap Rate the lower the property value, or the purchase price when buying. It’s used to compare different commercial ...


How to Calculate Cash on Cash

Saturday, February 19

Cash on Cash — The cash income earned on the cash invested in a property.    Annual Cash Flow÷ Total Investment------------------------------= Cash on Cash     $29,833÷ $410,400-----------------= 7.27%


How to Calculate Payback Period

Friday, February 18

Payback Period (Years) — The number of years it takes to payback your Total Investment.    Total Investment÷ Annual Cash Flow*---------------------= Payback Period (Years)    $410,400÷ $29,833---------------------= 13.76 (Years)


How to Calculate Purchase Price Based on Nearby Area Cap Rate

Thursday, February 17

Calculate property value based on Nearby Area Cap Rate and property Yearly NOI. Used for commercial properties, Multi-Family 5-units and above.    Net Operating Income÷ Nearby Cap Rate----------------------= Property Value  $112,330.20÷ 0.06------------= $1,872,170


How to Calculate – Flip – Maximum Purchase Price

Wednesday, February 16

When purchasing a property, it's wise to calculate the maximum purchase price or best offer on a property by assuming projected profit and cost. To be used as a general rule. ARV (After Repair Value) – The Estimated Value of the Property after all repairs are completed. Repairs – Repairs that ...