Understanding Cap Rates and the impact they have on prices!

[Easton Hill]

One of my favorite parts of investment real estate is also one of the worst!

Investment real estate is valued through cap rates

You take the cap rate and then divide it by the true earnings of the property (NOI) to get the value

NOI = $100k / 0.04% = $2,500,000

Every dollar you add to the NOI generates $25 dollars in value

Every dollar you subtract from the NOI reduces value by $25 dollars

As an entrepreneur that's exciting because NOI is mostly in your control!