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Cap Rate

Phoenix Real Estate Investment Primer – Cap Rates, Part Deux

Yesterday, we talked about how to calculate the cap rate – a very, very basic figure that can help investors compare one property to another on an apples to apples basis. Now, let me tell you why you should be a bit judicious in your use of cap rate as an investment measure. On single family detached homes, cap rate works best when the homes being compared are relatively similar. Since the Phoenix real estate market is dominated by tract homes, the type of home involved – build quality, construction standards, etc. – are roughly the same across the board. […]