Cap Rate = (Annual NOI / Purchase Price) x 100. NOI is Gross Rent minus Operating Expenses (not including mortgage). A higher cap rate means higher return but often in less desirable areas. Always compare similar properties when using cap rates for investment decisions.
Formula
Cap Rate = (Annual Net Operating Income / Purchase Price) x 100.
NOI Calculation
Gross rent minus property taxes, insurance, maintenance, property management, and vacancy.
How to Interpret
Higher cap rate = higher potential return but often more risk or less desirable area.
San Antonio Ranges
Typical cap rates in San Antonio range from 5% to 8% depending on area and property type.
Comparison Method
Always compare cap rates of similar properties in similar areas for accurate analysis.