Jeannie Niles Real Estate Investment
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Why Doesn’t Cap Rate Include Mortgage Interest?
Cap Rate is an investment tool for analysis that enables an investor to compare one investment to another. The investment creates “net income” and that is the important factor……what leverage an investor chooses to utilize is a totally different decision.
Using Cap Rate I can compare an investment in real estate to a CD at Bank of America or Dividends earned in the stock market. The degree of risk always increases the cap rate.
Always check the itemization of expenses. Many, if not most of the time the expenses will be understated. Understated expenses overstates net income, thus overstating value.
On a newer building in a stable area, expenses should be 32 to 35%. On an older building in a management intensive area, expenses can run as high at 60%.
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Income property has once again become “Income property”.
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There are many small income properties available in the area. Prices here have declined over 50% since the peak of the market late 2005/early 2007.
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It’s possible to obtain some great apartment financing. 25% down payment and interest rates at 6% or slightly below.
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Cap Rate is an investment tool for analysis that enables an investor to compare one investment to another.
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Cap Rate is the best tool for determining the value of an income property.
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Some of the most outrageous episodes in property ownership that the owners lived to tell about.
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Only 5% sales agents or brokers actually own investment property, and only 10% actually sell a property.
Every investor's situation is unique, and I have over 25 years experience solving problems. Use the form below to ask me about your unique needs.
Jeannie Niles Real Estate Investment
P.O. Box 317
Palm Desert, CA 92261
P: (760) 360-4020
F: (760) 340-9069
E: jniles@realestate-investment.com
