When buying rental properties, the single most common formula used is the Capitalization Rate Formula.
But when selling a rental property, don’t forget to run this formula on your numbers! Compare your property with others listed in your area with the Cap rate, and price your property aggressively do get the highest Cap Rate in your area!
– Use the Capitalization Rate Formula when buying AND selling rental properties!
– The Cap Rate formula is not the end all be all, use it to narrow down your search when buying rental properties, but switch to more complex formulas for further analysis – more on this to come!