Tell-Tale Sign Of A Real Estate Market Bubble, Cap Rate Explained, How Rising Prices Affect Real Estate Contracts


Tell-Tale Sign Of A Real Estate Market Bubble

Real Estate Tip:

The Capitalization or Cap Rate for a property is the ratio between its net operating income (NOI) and the property’s value:

Capitalization Rate = Net Operating Income/Value

You can transpose the formula to solve for property value or net operating income:

Property Value = Net Operating Income/Capitalization Rate

Net Operating Income = Property Value*Capitalization Rate

Real Estate Insight:

If you sign a contract to buy property in a rising real estate market, you've already made money by the time you close