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Tag: how to interpret cap rates

How to Use CAP Rates to Evaluate Investment Properties and Calculate ROI

When investing in real estate, one important metric you can use to evaluate potential properties is the capitalization rate, or CAP rate for short.

The CAP rate measures the expected return on investment (ROI) an investor can earn on a property based on its income potential; it is calculated by dividing the net operating income (NOI) by the property’s market value. 

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