Cap rate, short for capitalization rate, is a widely used metric in the real estate industry to assess the value of income-producing properties. To calculate the cap rate for a multi-family property, experts typically follow these steps:
Cap rates can vary widely depending on the location, type, and condition of the property, as well as the prevailing market conditions. Multi-family experts use cap rates to compare different properties and assess their potential for investment. A higher cap rate indicates a higher potential return on investment, while a lower cap rate indicates a lower potential return.