[Verse 1] Sarah owns a building, rents are rolling in Grocery store downstairs, law firm on floor ten Monthly checks arriving, but what's the building worth? She needs a number solid, planted firm in earth [Chorus] NOI divided by the cap rate Property value, calculate Net Operating Income flows Minus expenses, here's what shows Cap rate percentage sets the pace Direct method finds the place NOI over cap rate equals worth Valuation hits the earth [Verse 2] First collect the rental income, every tenant pays Subtract the operating costs throughout the days Property taxes, insurance, maintenance and repair Management fees and utilities, handle with care [Chorus] NOI divided by the cap rate Property value, calculate Net Operating Income flows Minus expenses, here's what shows Cap rate percentage sets the pace Direct method finds the place NOI over cap rate equals worth Valuation hits the earth [Bridge] Capitalization rate reflects the market's mood Riskier properties need higher rates pursued Compare to similar buildings sold nearby The cap rate tells you what investors will buy [Verse 3] Hundred thousand NOI with a cap rate of eight Divide that income stream, don't hesitate One point two five million dollars is the prize Direct capitalization never lies [Chorus] NOI divided by the cap rate Property value, calculate Net Operating Income flows Minus expenses, here's what shows Cap rate percentage sets the pace Direct method finds the place NOI over cap rate equals worth Valuation hits the earth [Outro] Income approach so clean and bright Mathematics makes the valuation right Capitalization method shows the way Property value found today
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