how would you find a cap rate on a vacant property. The property has no income, I heard a lot of investors talk about pro forma cap rate, how do I find the cap rate?
Cap rates come from CLOSED SALES that are annalyzed by professioal third party companies that report the cap rate. There is no need for an investor to ever try to calculate a cap rate. Investors should learn to calculate NOI. It starts with PGI potential gross income. Use market vacancy and operating expenses. Then that is the Value that the property is worth once it is brought to market conditions. From there deduct BELOW THE LINE the lost rents and expenses needed to lease up the property.
Seth is awesome. I always learn something from watching is UA-cam videos.
Thanks so much!
You did such a great job on explaining! Just what I have been looking for. Thank you!
Glad to hear it helped!
Thanks Seth . Your a great teacher
how would you find a cap rate on a vacant property. The property has no income, I heard a lot of investors talk about pro forma cap rate, how do I find the cap rate?
Cap rates come from CLOSED SALES that are annalyzed by professioal third party companies that report the cap rate. There is no need for an investor to ever try to calculate a cap rate. Investors should learn to calculate NOI. It starts with PGI potential gross income. Use market vacancy and operating expenses. Then that is the Value that the property is worth once it is brought to market conditions. From there deduct BELOW THE LINE the lost rents and expenses needed to lease up the property.
great contact