Investing in real estate is one of the fastest ways to grow your wealth in America. As the real estate market begins to climb again, you may be tempted to jump in on the action and buy up properties that are bound to be inside of a booming economic area in the near future. However, before you purchase an investment property, you will want to know a few tips for ensuring your property is inherently valuable.
To truly determine the value of a property, you need to know its capitalization rate as well as the going capitalization rate in the same area on a similar property. All real estate professionals put the capitalization rate above all else when determining whether or not to purchase a property. To obtain the capitalization rate of a property, you must take the net operating income of a property and divide it by the sales price.
Calculate the Cap Rate in 4 Simple Steps: Read More