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CAP Rate Secrets for Real Estate Agents | Real Estate News
Real estate pros, here’s your secret weapon: the CAP rate. It’s a simple formula—Net Operating Income divided by Property Value—that instantly tells you if an income property is worth a closer look. A 6% CAP rate on a $2M property earning $120K annually? That’s your baseline return before debt or taxes. Think of it as a risk gauge (JPMorgan) or income estimate (Investopedia). But don’t stop there—it’s just a screening tool. You still need to factor in debt service, cash flow, and repair costs. Higher CAP rates aren’t always better—they can mean higher risk. Use it to cut through the noise…
The skinny
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