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Capitalization Rate

Property Value Based on a Net Return Via Capitalization Rate

Calculating Property Value Based on a Net Return Via Capitalization Rate 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.Before you can …

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Loan to Value

What is a Loan to Value Ratio (LTV) and How Is It Calculated?

Loan to Value Ratio (LTV) What Is It?When considering how to invest in real estate, one term you may see come up time and again is loan to value ratio (LTV). It is a lending risk assessment ratio that lenders examine before approving a loan.How Is It Calculated?The LTV is determined by what percentage an …

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