Saurage Rotenberg Commercial Real Estate
08.28.17Learn to Calculate Property Value with Capitalization Rate

Article submitted by Jim Allen, Sales and Leasing Agent for Saurage Rotenberg Commercial Real Estate

Written by James Kimmons | July 3, 2017

As a real estate agent or broker working with investor clients, you'll need to understand income property valuation methods. One used frequently uses property income and the capitalization rate to determine the current value of the property for purchase consideration.  This is a good article for investors as well.  If you're just starting out, understanding cap rate is important to your future business growth.

If you're a real estate investor, the first thing you want to do if you're considering buying a property is to determine not only its market value to purchase, but also its operating income and costs to determine if it meets your cash flow and profitability goals.  The NOI, Net Operating Income, of a property simply defined is rents minus expenses.  Here's how it is calculated.

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Jim Allen earned his bachelor’s degree from Baylor University in Waco, Texas and his masters from Louisiana State University.  In addition to his multiple degrees he has taken numerous coursework in banking, marketing, accounting, and business law.  As a complement to his sales experience, Jim also has 30 years experience in commercial real estate financing.

Saurage Rotenberg Commercial Real Estate is a member of the Baton Rouge Area Chamber of Commerce (BRAC); the West Baton Rouge Chamber of Commerce; the Baton Rouge Better Business Bureau; the Louisiana Commercial Data Base (LACDB); and the International Council of Shopping Centers (ICSC). Several agents, on an individual basis, are members of the Society of Industrial and Office Realtors® (SIOR), the Certified Commercial Investment Member Institute (CCIM); the National Association of REALTORS® (NAR); and the Greater Baton Rouge Association of REALTORS® Commercial Investment Division (CID).

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H.N. “Hank” Saurage IV, CCIM / Saurage Rotenberg Commercial Real Estate, LLC / Licensed in Louisiana and Mississippi