CAP Rate is a measurement for the value of a rental investment. CAP Rate should be above six or seven percent.
If the CAP rate is the same or less than the savings interest rate at a bank, pick a different property, or put your money in the bank…. it has less risk.
Now here is an example of these calculations. We will use a sample property priced at $100,000, Gross Scheduled Income of $10,000, Other Income of $1,000, a 10% vacancy allowance, and $5,000 operating expenses.
Click here to view the full investment report for this example.
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