cap rate formula varies and depends on a few parameters

For the example A (SFH, simplest case), roughly,

cap rate = (annual cash flow - annual rent * 0.05) / cash down

= 12 * (400 - 1800*0.05) / 37750

= 9.854%

 

Note: The parameter 0.05 means that 5% of your rent will be lost for vacancy and repairs (during and after rent). I would use larger number like 7% for this. 

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cap rate = net rent before mortgage payment/cost -happyfolk- 给 happyfolk 发送悄悄话 (977 bytes) () 12/09/2011 postreply 20:26:28

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