acceptable cap rate for rental property
Remember that assets with steady monthly cash flows don't appreciate very much over time. A high area capitalization rate can produce a large monthly cash flow, but it doesn't appreciate very much over time.
A low capitalization rate usually doesn't generate a large monthly cash flow. It will appreciate over time, however.
Consider not only the cap rate, but also hold time and appreciation, as well as cash flow. All of these are valid criteria for investors to consider. This will help you to determine the capitalization rate that you desire and need.
Remember that assets with steady monthly cash flows don't appreciate very much over time. A high area capitalization rate can produce a large monthly cash flow, but it doesn't appreciate very much over time.
These are only two aspects that contribute to the calculation of the cap rates. The cap rate should not only be determined by income, but also price
You should also consider your investment goals and criteria. Knowing your investment criteria will help you identify the deals you're looking for and how you can use the capitalization rate in order to find the best deal for you and your investors.
Capitalization rate is a measure that tells investors how long it will take for them to make their investment back. Divide the NOI by your property's purchase price to calculate the cap rate.
You probably know that cap rates are only one part of a deal. While they are fundamentally and vitally important, they are just one aspect of a deal.
