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.
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.
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%