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In Business, what is a 'Cap Rate'?
#75419
10/13/04 12:58 AM
10/13/04 12:58 AM
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Joined: Jul 2001
Posts: 90 Texas
Robert DeNiro
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I see that term all the time. I was just wondering what it is. I see ads for commercial property that say "13% Cap Rate!, Great Buy!"
How is a cap rate determined? Whats a good cap rate?
Fredo, you're my older brother and I love you, but dont ever take sides with anyone against the family again
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Re: In Business, what is a 'Cap Rate'?
#75421
10/13/04 01:23 AM
10/13/04 01:23 AM
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Joined: Jul 2001
Posts: 90 Texas
Robert DeNiro
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so if I had a business that was doing $21,000 in revenue, and had $9,000 in expenses including my property insurance, and taxes but not including my debt service, what would be my cap rate?
The value of the property is $1,350,000.
Would that be a cap rate of like 88? That doesnt sound right.
Fredo, you're my older brother and I love you, but dont ever take sides with anyone against the family again
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Re: In Business, what is a 'Cap Rate'?
#75425
10/13/04 05:31 AM
10/13/04 05:31 AM
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Joined: Jun 2004
Posts: 5,602 Yunkai
afsaneh77
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Mother of Dragons
Joined: Jun 2004
Posts: 5,602
Yunkai
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Originally posted by Robert DeNiro: so if I had a business that was doing $21,000 in revenue, and had $9,000 in expenses including my property insurance, and taxes but not including my debt service, what would be my cap rate?
The value of the property is $1,350,000.
Would that be a cap rate of like 88? That doesnt sound right. Assuming your net income $12,000 the cap rate would be roughly 0.9%. Are we talking $12,000 per year?! That doesn't sound right. I think you're better off by selling it and put your money in the bank, they at least give you 4% profit.
"Fire cannot kill a dragon." -Daenerys Targaryen, Game of Thrones
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Re: In Business, what is a 'Cap Rate'?
#75428
10/14/04 12:49 AM
10/14/04 12:49 AM
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Joined: Jul 2001
Posts: 90 Texas
Robert DeNiro
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those figures were monthly not yearly.
Fredo, you're my older brother and I love you, but dont ever take sides with anyone against the family again
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