SubscribeCapitalization Rate: Not just for buying properties! – Landlording TV – #31
When buying rental properties, the single most common formula used is the Capitalization Rate Formula. But when selling a rental property, don’t forget to run this formula on your numbers! Compare your property with others listed in your area with the Cap rate, and price your property aggressively do get the highest Cap Rate in your area!
Landlord Lessons:
- Use the Capitalization Rate Formula when buying AND selling rental properties!
- The Cap Rate formula is not the end all be all, use it to narrow down your search when buying rental properties, but switch to more complex formulas for further analysis – more on this to come!
Great vid. I am always surprised as to how many investors do not understand that. Also, how many people calculate it wrong.
It’s funny, cause a few years back I was selling a 3 unit, and an investor told me he loved the property but turned it down because the Cap Rate was too low for him, but when I tried to replicate the cap rate figure he told me, I couldn’t. So, him not fully understanding the formula potentially cost him a LOT of money!
What a great resource!
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