[Verse 1] When you want to value real estate today There's a simple method that will show the way Take the income that the property can make Divide by cap rate, that's the value you'll take Net Operating Income is the key That's NOI for you and me Revenue minus operating costs But not the interest that the loan boss [Chorus] Direct cap, direct cap NOI divided by the cap Property value in a snap With direct capitalization map Cap rate up, value down Cap rate down, value's crowned Income approach, tried and true Direct cap will see you through [Verse 2] First you calculate the NOI right Rental income shining bright Subtract the expenses, vacancy too Maintenance, taxes, insurance due But don't subtract the mortgage payment That's not part of this arrangement Operating income, clean and clear That's the number we hold dear [Chorus] Direct cap, direct cap NOI divided by the cap Property value in a snap With direct capitalization map Cap rate up, value down Cap rate down, value's crowned Income approach, tried and true Direct cap will see you through [Bridge] Capitalization rate reflects the risk Higher risk means higher rate, don't miss Market conditions set the cap Comparable sales help fill the gap If NOI is one hundred thousand strong And cap rate's ten percent all along Divide them out, the math is clean One million dollars is what we've seen [Chorus] Direct cap, direct cap NOI divided by the cap Property value in a snap With direct capitalization map Cap rate up, value down Cap rate down, value's crowned Income approach, tried and true Direct cap will see you through [Outro] Remember the formula in your mind NOI over cap rate, value you'll find Direct capitalization, simple and straight For property values, it's really great
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