Consider the Capitalization Rate when Investing in Apartment Buildings
The difference between determining value when purchasing apartment buildings and single family homes is valuation determined by the capitalization rate and valuation determined by comparables based on supply, demand and emotion, respectively. The decision making process in purchasing an apartment building is all about the numbers, there is no emotion involved.
An apartment complex is valued based on the income generated from the property. Look at the number of units and the average rent being generated by each unit. Subtract the expenses to come up with net operating income, also known as capitalization rate, or cap rate for short. Based on the cap rate for the type of building in your market, you come up with a value. You’re not buying the building because you like the exterior, or it has a nice, big yard. Your lender doesn’t care about any of this; he’s going to have his own set of guidelines for making the decision to finance the purchase. A lender’s decision will be based on the income generated from the property and the average cap rate for the market. The purchaser must show adequate income generation to cover any unforeseen crisis he may encounter, to assure the lender that the payments will be made timely and there will be minimal risk involved in financing your business venture.
This was taken from an interview between Lance Hood from SuccessInsiders.com and Anthony Chara. For access to Anthony Chara’s teleseminars, go to http://www.successinsiders.com/
SuccessInsiders.com is committed to helping people succeed, both personally and professionally, by providing them with interactive access to an ever growing team of Millionaires and Experts in wealth creation and personal development. By following the guidance and strategies, through interviews, expert Q&A, telecoaching and other resources offered by people who have already succeeded, a person’s chance for success is greatly increased.
How would you like to have access to a Team of Experts willing to share their Insider knowledge with you? Imagine asking some of the greatest minds on earth how to create wealth in all areas of your life. It starts here ==> http://www.successinsiders.com/home.html
CONTACT INFORMATION:
Heather Thomas
(641) 715-3900 ext. 7576941
support@successinsiders.com
Real Estate, Investment, Success, Buying Apartment Buildings, Cap Rate
The difference between determining value when purchasing apartment buildings and single family homes is valuation determined by the capitalization rate and valuation determined by comparables based on supply, demand and emotion, respectively. The decision making process in purchasing an apartment building is all about the numbers, there is no emotion involved.
An apartment complex is valued based on the income generated from the property. Look at the number of units and the average rent being generated by each unit. Subtract the expenses to come up with net operating income, also known as capitalization rate, or cap rate for short. Based on the cap rate for the type of building in your market, you come up with a value. You’re not buying the building because you like the exterior, or it has a nice, big yard. Your lender doesn’t care about any of this; he’s going to have his own set of guidelines for making the decision to finance the purchase. A lender’s decision will be based on the income generated from the property and the average cap rate for the market. The purchaser must show adequate income generation to cover any unforeseen crisis he may encounter, to assure the lender that the payments will be made timely and there will be minimal risk involved in financing your business venture.
This was taken from an interview between Lance Hood from SuccessInsiders.com and Anthony Chara. For access to Anthony Chara’s teleseminars, go to http://www.successinsiders.com/
SuccessInsiders.com is committed to helping people succeed, both personally and professionally, by providing them with interactive access to an ever growing team of Millionaires and Experts in wealth creation and personal development. By following the guidance and strategies, through interviews, expert Q&A, telecoaching and other resources offered by people who have already succeeded, a person’s chance for success is greatly increased.
How would you like to have access to a Team of Experts willing to share their Insider knowledge with you? Imagine asking some of the greatest minds on earth how to create wealth in all areas of your life. It starts here ==> http://www.successinsiders.com/home.html
CONTACT INFORMATION:
Heather Thomas
(641) 715-3900 ext. 7576941
support@successinsiders.com
Real Estate, Investment, Success, Buying Apartment Buildings, Cap Rate
Labels: Buying Apartment Buildings, Cap Rate, Investment, real estate, Success
posted by Ralph Marcus (Mark) Maupin | 7:24 PM
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