The last fifteen or twenty years have witnessed a compression of capitalization rates in the multifamily sector. When I first began appraising in 1990 out in Dallas, the RTC was at full throttle and apartments were hard to give away. That's when the Federal Government had the bright idea to create LIHTC tax credits, administered by the people … [Read more...]
Equity Dividend Rates – Downloadable Spreadsheet
An equity dividend rate, also known as cash-on-cash, is the annual rate investors expect to receive on their equity investment. For example, suppose I invest $10,000 and expect to receive $1,500 annually from an investment. It may be calculated as: $1,500/$10,000 = .15 or 15%. There are a few different methods to estimate what a typical market … [Read more...]
Band of Investments Method
What is the Band of Investments Method? The phrase "Band of Investments" refers to a method used by commercial appraisers or investors to calculate a rate known as an overall capitalization rate. This rate is then used to convert the net income produced by a property into an indication of value. Here is a brief explanation of how it works. Few … [Read more...]
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