They couldn’t tell you what a CAP rate is if it hit them in the mouth.

Also it's possible to take advantage of opportunities where you could increase a cap rate by buying a vacant building for example and fixing up the units.

And 8.00 is annual interest rate.I also looked at this method as way to determine a cap rate.If you haven't found the answer, I hope this helps.Article: http://www.ccim.com/cire-magazine/articles/cap-rate-calculations

There might be a cap on the number of months you could or should get but without say, three months, on each home you run the risk of running up high carrying costs right off the bat.You didnt share your numbers so I hope you're comfortable with that.

Doing my calculations, at the prices they are asking I don't even get a Cap Rate of 6% or the 1% rule.

Being so new I would the more experienced opinion of the wiser BiggerPockets community.Here is my dilemma:I live in Northern California where house prices have hardly dropped and my community has currently 1 house below the $400,000 price.We are near a University and the rental market is always busy.I'm currently looking at two houses.A Duplex that rents for a total 1700 / monthA Fourplex with rents that total 3950 /monthThe duplex, I'm thinking of offering 215k bank wants minimum 235kFourplex I was thinking of offering 400k Banks wants 465kAt these prices my calculations don't seem to cover the 50% rule.I'm doing FHA or Conventional with only %5 down.Doing my calculations, at the prices they are asking I don't even get a Cap Rate of 6% or the 1% rule.What do you guys think?

If I understand correctly, my NOI is $5397 for a CAP rate of 15%.Looking forward, I should be able to reduce the taxes to about $800 with a revaluation and market rent for 2/1s is about $550.

Interest rates are chosen base on price and are affected by the origination cost (which is not necessarily disclosed) For example, let's say:4.375% would cost you 3,5004.5% would cost you $500 in adjusted origination charges4.625% would give you a small credit of $1,500 to go towards your other costs.A lot of times what you will be offered is 4.5%, but this doesn't mean you don't have access to higher or lower rates, it will just cost differently.With a lender that charges significantly less origination, 4.375% might only cost $500, and therefore be offered to you.The new QM rule now imposes a cap on fees and points that can be charged for the borrower.

If you're in the D.C. area then a cap rate of 7 or 8 is pretty good.

Sure you can set a cap and bill back the tenants for the difference but my experience is many times they will not pay it or argue about it's accuracy.