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About Mark
I grew up in St. Louis and I love my city! I've been a REALTOR for 9 years and owned We Sell St. Louis, REALTORS for 6 years now. I am a veteran of the US Navy and have worked in both politics and sales. Politics is my passion - sales is my bread and butter.
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What is a 'Capitalization Rate' or Cap Rate?
Each property has a different capitalization rate. It's an indicator of the property's rate of return. The capitalization rate is calculated by dividing the annual income by the cost of the property. For example, if a property earns $100,000 in one year and its cost is $1,000,000, the cap rate is 10%.
The gross cap rate is the capitalization rate based on the gross income and doesn't take expenses into account.
The net cap rate is the capitalization rate based on a property's net income - that is the income less the operating expenses (utilities, maintenance, real estate taxes and insurance.)