Cap Rate Calculation for an 8-Unit Building Explained!

hey everyone I'm going to show you really quickly how to calculate cap rate on an 8un building here are my incomes here's the monthly rent 11,600 here is my annual gross income so I take the monthly rent times 12 I deduct 35% for operational expenses I end up with what's known as net operating income I divide that by my cap rate which is in this point I'm going to use 5% where does that come from your Market might be different your market cap rate could be higher or lower depending on where you're at and I come up with a value of 1.8 so again taking noi dividing by cap rate I come up with value this formula I call Uncle Irv what I want you to know is the higher the cap rate the lower the value the higher the cap rate the lower the value follow me from more tips