Calculating Cap Rate (Capitalization Rate) for real estate investments is straightforward. We previously explained cap rate for real estate investors and landlords. Recall that Cap Rate = Net Operating Income / Value.
Here’s how you calculate the Capitalization Rate for one of your rental properties in QuickBooks. This uses the Sample Data File included in our training course.
Step 1. Find the value of your property. Check the Chart of Accounts for the property’s value. Since we keep depreciation in a separate contra-account, you can grab the value that you see without adjustment. Here we will compute the cap rate for a duplex, 3304 Covenant.
Step 2. Go to the Reports menu and choose the LandlordAccounting.com memorized reports menu. Choose profit and loss by class and filter to only show the 3304 class and sub-classes.
The Net Adjusted Income for this property is $8,362.57.
Step 3. Calculate the Cap Rate. In our example that is $8,362.57 / $90,000 = 9.3%.
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