From the course: Real Estate Analysis Foundations

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Yields and cap rates

Yields and cap rates - Microsoft Excel Tutorial

From the course: Real Estate Analysis Foundations

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Yields and cap rates

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- In this lecture, we're going to talk about a couple of concepts that really only apply to income producing assets. So rental properties would be one of them. These concepts, the yield and the cap rate, doesn't really apply to fix and flips 'cause it has to do with the income that a property produces. So let's look at what they are. Let's look at income properties first. So for an income property, it may look something like this where you invest a certain amount of money and then you collect some rent every year. Hopefully they're growing, but in this example, let's just say every year you're collecting something consistent, okay. The yield of an income property is basically the rent in a given year divided by your total investment. So the yield can be different depending on which years the rent that you're using. The rent in year one may be a little bit lower than the rent in year seven. So when you are using yields to compare different rental income properties, make sure you're…

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