When evaluating potential investments in real estate, one metric often stands out for its simplicity and utility: the capitalization rate, or cap rate. But what exactly does it tell you, and how can you use it effectively what is cap rate in real estate? Here's a closer look. The cap rate is the ratio between an investment property's net operating income (NOI) and its current market value or purchase price. It is expressed as a percentage and indicates the expected return on a property if it were purchased outright without any financing. Cap rates serve as a snapshot of an investment's profitability and risk. High cap rates typically indicate higher potential returns, but they may also suggest greater risk. Conversely, lower cap rates often imply stable, less risky investments, such as properties in high-demand locations. For more info click here #whatdoescapratemean https://ledgre.ai/getting-started-landlords-guide-to-cap-rate-in-real-estate/
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