Determining The Value Of A Rental Property!

Many people are Investing in Real Estate and renting properties to get a better return on their money. The best way to evaluate a potential investment is by determining the Cap Rate. The Cap Rate is calculated by dividing the Net Operating Income which would be the income minus expenses (taxes, insurance, management, repairs, maintenance) by the asset cost. For example if you were to buy a rental home which had rental income of $2000 per month with $500 per month in expenses the NOI would be $1500 per month times 12 months would be $18,000. The NOI of $18,000 divided by the asset cost of $240,000 is .075 so rounding this number you would have a 7% rate. You as an investor have to decide if a 7% rate of return is what you are looking for. You also have to look at how risky the investment is. There is also a quick way to evaluate a potential investment before deciding to look at a property and that is the 1% rule. This is determined by...http://www.realestateresource.tv