Cap Rate calculation

[Robert Schulmeisters]

When calculating Cap RAte what is included in the NOI?

Do you include Debt Service and CAp EX?

[Benjamin Ficker]

Get the book "What Every Real Estate Investor Needs to Know About Cash Flow... And 36 Other Key Financial Measures" by Frank Gallinelli

The question should be written "when calculating Cap Rate what is included in the Operating Expenses?" NOI is the result of Gross Income minus operating expenses. NOI / Total price gives you the Cap Rate. Short answer is no. Debt Service and Cap Ex are not included in your operating expenses. But really read that book and learn these formulas inside and out. It'll put you far ahead of the competition when you can run through them quickly. (Also, don't use Cap Rate on anything 4 units and under. Too easy to fudge those numbers if you're the seller.)