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How To Calculate Capitalization Rate for Real Estate

how do you calculate the discount rate

By James Kimmons. Real Estate Business Expert

Jim Kimmons has many years of experience as a real estate agent and broker in three states, and serves as a consultant to other real estate professionals on using technology to improve their marketing and office management.

Those who invest in real estate via income-producing properties need to have a method to determine the value of a property they're considering buying. By using other properties' operating income and recent sold prices, the capitalization rate is determined and then applied to the property in question to determine current value based on income.

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