The capitalization rate of a property shows what it’s generating for investors — without factoring in financing. To find the capitalization rate, divide the net operating income by the price of the property. The capitalization rate should fall between 8 percent and 12 percent.
Before you invest your money in rental real estate, learn how to do a real estate investment property analysis so you can understand where the potential rewards lie — and what the financial drawbacks may be as well. By learning the basics of an investment analysis for real estate decisions, you can ensure you avoid any investment that is too risky — and may end up reaping generous rewards from your decision.
Contact Rise Construction today for more information on rental property management for your Houston real estate investments.