Does anyone here offer (or know where I can find people who do) private financing for commercial/residential properties? [ Edited by mlove30 on Date 06/11/2005 ]
The definition you found for CAP rate is slightly flawed. The CAP rate is usually defined to be the Net Operating Income (NOI) divided by the price. In your example this is 2.5/15 = .1666.... or 16 2/3 %. The NOI is the income less expenses but excludes loan service.
The reciprocal of the cap rate expressed as a fraction is equal to the number of years to pay off the property assuming that there are no loans. In your case 1/.1666.. = 6, the number you got!
look in your local yellow pages for brokers that do private money, HMLs, etc.
The definition you found for CAP rate is slightly flawed. The CAP rate is usually defined to be the Net Operating Income (NOI) divided by the price. In your example this is 2.5/15 = .1666.... or 16 2/3 %. The NOI is the income less expenses but excludes loan service.
The reciprocal of the cap rate expressed as a fraction is equal to the number of years to pay off the property assuming that there are no loans. In your case 1/.1666.. = 6, the number you got!
EdMeyer - Thanks for explanation of cap rate. It helps.