Updated 55 days ago
3575 Piedmont Road Building 15, Suite 120 Atlanta, GA 30305
Cap Rates provide a tool for investors to use for roughly valuing a property based on its net operating income. For example, if a real estate investment provides $160,000 a year in Net Operating Income and similar properties have sold based on 8% cap rates, the subject property can be roughly valued at $2,000,000 because $160,000 divided by 8% (0.08) equals $2,000,000. A comparatively lower cap rate for a property would indicate less risk associated with the investment (increasing demand for the product), and a comparatively higher cap rate for a property might indicate more risk (reduced demand for the product)... All of the capital invested in a project, including pure debt, hybrid debt, and equity. The stack is generally described from top to bottom going from the category of capital with the most risk at the top going down the stack to the position with the least risk. The higher the position in the stack -- the higher the returns that can be expected for that capital because of..