How do you calculate Cap Rate?
[deleted]
[{"id": "fqwusdi", "text": "Stabilized future Net operating income (revenues minus operating expenses excluding debt service and other specific ownership costs) divided by purchase price/total property value.", "replies": [{"id": "fqwuwvn", "text": "This and excluding non-rec cap ex as well", "replies": [{"id": "fqwvn3w", "text": "Yes and non-rec capex is pretty asset class specific.", "replies": [], "depth": 3}], "depth": 2}, {"id": "fqx05jk", "text": "Purchase price should not be in the denominator (unless you just bought the property). Even in a year after purchase the value could be totally different", "replies": [{"id": "fqz8gxh", "text": "Cap rates are pretty much only used during acquisition/disposition so using the proposed purchase price typically makes the most sense since that is the number you are sensitizing and comparing yield of other assets to.", "replies": [{"id": "fqzam2i", "text": "true, okay I misunderstood what you meant. You meant \"proposed purchase price\" not \"last price the property was purchased at\"", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fqwutez", "text": "Net Operating Income / Value", "replies": [], "depth": 1}, {"id": "fqwutpo", "text": "Check this:\n\n\nhttps://www.investopedia.com/terms/c/capitalizationrate.asp", "replies": [], "depth": 1}, {"id": "fqx02ev", "text": "How could have not found this on google? Can you explain your confusion?", "replies": [], "depth": 1}]