Quote:
Originally Posted by dchan
When I was doing property searches for the real estate developer I worked for 7 years ago, a decent cap rate in an average NYC neighborhood was closer to 5%. I did a rough calculation by dividing the asking price by the building's annual total rent revenue. Not sure if that's the correct way to calculate cap rate.
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Cap rates are measured on Net Operating Income (NOI), essentially taking into account all of the expenses apart from capital items and financing costs. If you were getting a 5% rate on revenue, the actual cap rate was probably <3%.