Its most likely the one more misused concept in real property investment.
While agents, vendors, and loan providers tend to be fond of estimating coupons according to the cover rate, the way in which it really is generally utilized, they actually shortcut the true usage of an invaluable appliance. A broker prices a property by firmly taking the internet working earnings (NOI), dividing it by the deals cost, and voila!–there’s the cap rate.
But what do that quantity inform you? Does it reveal exacltly what the return might be when you use financing? No. can it consider the different financing words available to different buyers? No. Then just what does it show? (altro…)