Grant Cardone's calculation

[Joshua Hill]

Hey guys, I've been watching a good number of Grant's videos on getting started on multifamily real estate and I've noticed he does a quick calculation when he's skimming over examples of deals. It deals with the  Buying price, around 25% down payment, the cap rate and all of a sudden he has an estimate of the Income that the property could bring in.  Does anyone know specifically how he does it or know of a similar calculation?

Also, do you all have any tips on finding good/top notch brokers that will give me access to looking at the prime deals and not the left over loopnet ones?

[Jeff B.]

NOI/purchasePrice = CapRate

The problem is Which facts are given versus derived.

see this for manipulation of this equation.

Typically we will know the Purchase Price and the GSI and need to estimate the NOI (that's where the 50% rule come in handy). It is important to get Actual GSI and not some pro-forma that the owner / agent projects as possible.

If we can get the true NOI, we need to verify ALL the expenses have be accounted for.

Using some some-n-mirror number for a CapRate is deluding yourself and it's far worse than using the 50% rule.

Your question is precisely why I wrote the the Great Fallacy to clarify the improper use of the CapRate.