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Updated about 4 years ago, 11/01/2020

Daniel Peavey's profile image
Daniel Peavey's profile image
Daniel Peavey
  • from Atlanta, GA
  • Member since Dec 5, 2014
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220
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109
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Daniel Peavey's profile image
Daniel Peavey's profile image
Daniel Peavey
  • from Atlanta, GA
  • Member since Dec 5, 2014
Connect
Daniel Peavey
  • Atlanta, GA
109
Votes |
220
Posts
General Landlording & Rental Properties

Capitalization rate, does it decrease?

Daniel Peavey
  • Atlanta, GA
Posted

If I bought a property for 40k, ( purchase and rehab), and my Noi is 8k, my cap rate is 20%

Question?  If property value increases to 120k after 5 years, and my Noi is the same 8k, does my cap rate drop to 6 %?  Is cap rate dependent on the actual purchase price or the increase in equity over the years?

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