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  2. Capitalization rate - Wikipedia

    en.wikipedia.org/wiki/Capitalization_rate

    Capitalization rates are a tool for investors to use for estimating the value of a property based on its net operating income (NOI). For example, if a real estate investment provides $160,000 a year in NOI and similar properties have sold based on 8% cap rates, the subject property can be roughly valued at $2,000,000 because $160,000 divided by ...

  3. Real estate benchmarking - Wikipedia

    en.wikipedia.org/wiki/Real_estate_benchmarking

    Cash break even ratio: Estimates how vulnerable a property is to defaulting on its debt should rental income decline. Loan-to-value ratio: Calculates the ratio between the loan balance and the market value of a property expressed as a percentage. Capitalization rate: Measures the earning ability of an income-producing property.

  4. Gross rent multiplier - Wikipedia

    en.wikipedia.org/wiki/Gross_Rent_Multiplier

    An 8.33 GRM calculated on annual rents suggests the gross rent will pay for the property in 8.33 years. The common measure of rental real estate value based on net return rather than gross rental income is the capitalization rate (or cap rate). In contrast to the GRM, the cap rate is not a multiplier but a rate of annual return.

  5. Real estate appraisal - Wikipedia

    en.wikipedia.org/wiki/Real_estate_appraisal

    Real estate appraisal, property valuation or land valuation is the process of developing an opinion of value for real property (usually market value).Real estate transactions often require appraisals because they occur infrequently and every property is unique (especially their condition, a key factor in valuation), unlike corporate stocks, which are traded daily and are identical (thus a ...

  6. Income approach - Wikipedia

    en.wikipedia.org/wiki/Income_approach

    However, appraisers often mistakenly use a market-derived cap rate and NOI as substitutes for the discount rate and/or the annual cash flow. The Cap rate equals the discount rate plus-or-minus a factor for anticipated growth. The NOI may be used if market value is the goal, but if investment value is the goal, then some other measure of cash ...

  7. Home equity hazards: The risks of tapping into your property ...

    www.aol.com/finance/home-equity-hazards-risks...

    With elevated mortgage rates and high home prices constantly in the news, the idea of a drop in property values seems hard to imagine nowadays. Yet it can happen, and even has in a few overheated ...

  8. Business valuation - Wikipedia

    en.wikipedia.org/wiki/Business_valuation

    Business valuation is a process and a set of procedures used to estimate the economic value of an owner's interest in a business. Here various valuation techniques are used by financial market participants to determine the price they are willing to pay or receive to effect a sale of the business. In addition to estimating the selling price of a ...

  9. Perpetuity - Wikipedia

    en.wikipedia.org/wiki/Perpetuity

    Valuing real estate with a capitalization rate or cap rate (the convention used in real estate finance) is a more current example. Using a cap rate, the value of a particular real estate asset is either the net income or the net cash flow of the property, divided by the cap rate. Effectively, the use of a cap rate to value a piece of real ...

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