What is the relation between CAP rate and Mortgage rate ?
Can we say the CAP at least should be twice of mortgage rate
Thanks for your question! CAP rate doesn’t include mortgage expense. It’s the property’s net operating income in relation to the purchase price, including any repairs. There is no hard and fast rule on how much more the cap rate should be from the mortgage, since the mortgage isn’t factored in. Rental property profitability comes down to having positive cash flow after expenses and vacancies.
For more about cap rates, check out our article on what is a good cap rate.
Hope this helps!