If youb re not familiar with the term capitalization rate youb re not alone. However, if youb re thinking about investing in commercial real estate b even as a partner in a group b itb s a term you need to become familiar with. Youb ll also need to understand how to estimate potential capitalization rate if youb re going to make a worthwhile profit on your Florida commercial real estate investment.
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Capitalization rate is the expected rate of return on a property based on the expected income the property will generate.
- There is a basic formula for calculating capitalization rate. To determine capitalization rate, divide the income the property will generate, after repairs and variable costs, by the value of the entire real estate property if it were put up for sale today.
- Figuring out the capitalization rate of a property will give you a figure that can be used to make part of your decision on whether the property will provide the return that you need. However, it shouldnb t be your only tool when evaluating a commercial real estate investment property.
Contact us at Morris Southeast for more information and tips on Florida commercial real estate investment to help you earn money this year.
Tags: commercial real estate, commercial real estate in south florida, investing in commercial real estate, South Florida commercial real estate, South Florida commercial real estate services
