Look at the earnings before tax and interest, and determine a fair cap rate.

The current value of the investment, not the actual initial investment, should be used in the cap rate calculation.

To get the unlevered rate of return on an investment the real estate investor adds (or subtracts) the price change percentage from the cap rate.

For example, a property delivering an 8% capitalization, or cap rate, that increases in value by 2% delivers a 10% overall rate of return.

Our savings include capping rates so that no individual can earn more than 250,000 in any one year, saving 16 million alone.