Mobile homes, senior housing, and student housing each trade at different cap rates based on their risk. Cap rate, calculated as net operating income divided by price, shows the inverse relationship between rate and cost: lower cap rates mean pricier assets, higher cap rates mean cheaper ones.
mobile homes, senior housing, student housing. You know, so there's a lot of ways to invest there. And each one of those is kind of its own unique animal within this broader category of commercial.
And with the commonality that they're priced primarily on cap rate and you're a banker. So what's a cap rate?
Yeah, cap rate is a very simple calculation. It's the net operating income that a property produces divided by the price of the property. And so that creates this capitalization rate. And that's used as a very simple metric to value the property. And generally, the lower the cap rate, the more expensive the property, the higher the cap rate, the less expensive. And different asset classes trade at different cap rate ranges based on riskiness.
