The Cap Rate Formula Is Perfect for Buying Investment Properties

Real estate is widely considered the best and more consistent investment around. However, calculating the value of your investment is more challenging than checking your monthly bank statement. Multiple ways to calculate your return on investment (ROI) for a rental property exist. How you choose to do so depends on your situation. 

In this article, we’ll discuss the importance of calculating ROI for real estate and then show you how and when to calculate ROI for:

• Cash flow
• Cash-on-cash return
• Capitalization rate (cap rate)
• Appreciation

Here’s how to calculate ROI on a rental property: 

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