Commercial Real Estate and Cap Rates

In this video I explain cap rates and how they relate to the rate of return that you as an investor want to recieve on your investment.

Cap Rate Example

Equity .20 (20% Down Payment) X .15 (Rate of Return) = 3.0
Debt .80 (Amount Financed) X .05 (Debt Constant) = 4.0
Cap Rate to Buy at to Get A 15% Rate Of Return 7.0

20 X .20 = 4.0
80 X .05 = 4.0
8.0

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