Tommy Dobczyk explains how NOI and cap rate determine a property's value and return. A $131,000 NOI with a 6.5% cap rate beats a bank CD's 4% yield, showing why real estate can outperform traditional savings.
Are you in the deal room? Keep going. So right here it shows that our stabilized building NOI is gonna be $131,000. And if we do that based on the cap rate, now cap rate is how much you're going to get. Like if you were to take that money and put it in the bank and then the bank pays you back $135,000 or $131,000 a year, that cap rate is right there. So the bank is right now paying 4% on a 6-month CD, right? 4% per year. So that means over 6 months you're going to get 2%. So if I put $1 million in there, I'm only going to get $20,000 back. Right. Right. Or is that, is that right? $200,000 back. Something like that. With it at a 6.5%, I'm going to get 6.5% back, right, over the year. So this is how we end up with a value to the property.
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