Likely the single most misunderstood concept in all of real estate investing is the Capitalization Rate. So, what is it really, and how do we use it?

### It’s a Formula

Yes, it is a formula: Cap Rate = NOI / Valuation

However, while this is the mathematical formula, if you simply focus on the numbers instead of the perspective, you will miss the forest for the trees.

### So, What’s the Perspective

The perspective, simply put, is that the Cap Rate should be used as a measure of the market, and should never be used as a means of determining returns or how much to pay for a property.

Listen to this episode:

### Where Can You Find More?

The rest of the epizodes of my new Multifamily Syndication Unscripted podcast can be found here:

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