WEBVTT

00:00:00.000 --> 00:00:02.459
Welcome to Value Nation's Valuation Tip of the

00:00:02.459 --> 00:00:04.759
Day, your quick guide to U .S. property valuation.

00:00:05.179 --> 00:00:07.860
I'm your host, Charlie Johnson, with one tip

00:00:07.860 --> 00:00:10.679
to help elevate your real estate skills. Today's

00:00:10.679 --> 00:00:14.160
tip, how to read capitalization rate or cap rate

00:00:14.160 --> 00:00:17.100
for commercial properties. So cap rates measure

00:00:17.100 --> 00:00:19.960
a property's income potential, which is crucial

00:00:19.960 --> 00:00:22.719
for mortgage pros appraising retail or industrial

00:00:22.719 --> 00:00:25.260
spaces and for buyers investing in commercial

00:00:25.260 --> 00:00:27.789
real estate. It's pretty simple. you're going

00:00:27.789 --> 00:00:30.269
to divide the property's net operating income

00:00:30.269 --> 00:00:33.369
by its purchase price. So for example, a $1 million

00:00:33.369 --> 00:00:37.609
warehouse earning $70 ,000 annually has a 7 %

00:00:37.609 --> 00:00:41.729
cap rate. In 2025, so far in 2025, cap rates

00:00:41.729 --> 00:00:45.630
average 68 % for industrial properties, but are

00:00:45.630 --> 00:00:48.890
climbing closer to 10 % for logic. Lower cap

00:00:48.890 --> 00:00:52.310
rates mean higher valuations, signaling strong

00:00:52.310 --> 00:00:55.469
demand for that market, like in e -commerce driven

00:00:55.469 --> 00:00:58.079
warehouses, for instance. Higher cap rates, like

00:00:58.079 --> 00:01:01.600
in struggling office markets, suggest riskier

00:01:01.600 --> 00:01:04.359
investments. So mortgage pros, compare cap rates

00:01:04.359 --> 00:01:07.560
to local market averages just to validate the

00:01:07.560 --> 00:01:10.120
appraisals. And buyers, a lower cap rate might

00:01:10.120 --> 00:01:13.099
mean a pricier property, but better stability.

00:01:13.299 --> 00:01:16.579
Check on income statements to ensure the net

00:01:16.579 --> 00:01:19.140
operating income is accurate. Here's my takeaway.

00:01:19.319 --> 00:01:22.840
Use sites like LoopNet to find local mortgage

00:01:22.840 --> 00:01:25.799
cap rates. Mortgage pros, verify the income.

00:01:26.319 --> 00:01:29.900
data you know buyers favor properties with stable

00:01:29.900 --> 00:01:32.780
cap rates very simple look if you need help commercial

00:01:32.780 --> 00:01:36.159
valuations like even an avm or bpos which are

00:01:36.159 --> 00:01:40.459
fairly inexpensive head over to www .nationwideamc

00:01:40.459 --> 00:01:43.280
.com and find more information under the solutions

00:01:43.280 --> 00:01:46.900
tab or reach out to us directly at sales at nationwideamc

00:01:46.900 --> 00:01:49.780
.com tune in next time for another valuation

00:01:49.780 --> 00:01:52.900
valuation tip of the day