What's a Cap Rate in Real Estate? – Real Estate Cap Rate Definition





What’s a Cap Rate in Real Estate? – Real Estate Cap Rate Definition

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What’s a cap fee in actual property? If you are going to capitalize on the myriad of alternatives within the industrial actual property market, you are going to have to know. In this video, Spencer Levy, Senior Economic Advisor for CBRE and Chairman of Americas Research, explains.

From this video:

Spencer Levy: Lots of people assume {that a} cap fee is similar factor as a yield. And so what a yield is, is when you may have a return on an funding and a return on an funding, assume you set in ten {dollars}, you get one greenback a yr, that may be the equal of a ten p.c yield. And lots of people consider that is what a cap fee is. It’s the identical factor as yield. Well, it is not. While it is perhaps the identical factor as your preliminary yield getting into. It truly is the mixture of two issues. Number one, it’s the price of capital. Number two, it’s your development expectations.

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