Understanding Cap Rates

[Julio C.]

I'm trying to understand cap rates in multifamily real estate, and I don't mean getting the resulting number of dividing the NOI by the value of the asset.

What expenses should be included in the NOI formula? I typically use property taxes, insurance, vacancy, maintenance and repairs, capex reserves, and management fees.

When I run my own numbers, most of the times I will get a lower cap rate on an advertised property than the one from the broker. Most of the times brokers don’t add property management fees for example.

Can someone experienced clarify this for me?