General Terms

What Is An MSA?

An MSA is a metropolitan statistical area, which is an urbanized area with a minimum population of 50,000. 

We at Redwood Capital focus on areas with a growing population of 100,000 or more.

Business Terminology

What is a Cap Rate?

A cap rate (capitalization rate) is the value that a commercial property is valued at.  It is the net operating income divided by the purchase price of the asset or property.

Example:

Say you have a popsicle stand named YUM Popsicles that sells $100,000 worth of popsicles in a year. After your property taxes, property insurance, maintence, utilities and other expenses you are left with $50,000.  This is your net operating income.

YUM Popsciles NOI /YUM Popsicles Purchase Price = Cap Rate

Say YUM Popsicle stand could be sold for $500,000.  This would be calculated: $50,000/$500,000 =Cap Rate

Cap Rate = 10%