The usual practice is to invert this ratio to find what's called a capitalization rate.

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But look at a broader measure called the capitalization rate, and the picture improves.

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If you are renting, calculate a capitalization rate, and subtract 10% or more of the annual yield for maintenance and depreciation.

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Start with what real estate pros call the "capitalization rate, " the return a rental property likely will fetch in the coming year, as a percent of its market value.

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And all this is a nice reminder that the rent-versus-own ratio and its divinely inspired cousin, the capitalization rate, is perhaps the most important calculation you should make in your financial life.

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Mr. Ades, declined to disclose the projected returns of the REIT, but estimated the capitalization rate for the acquisition was relatively high at about 7%, indicating a strong initial yield for the buyer.

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Finally, all companies have long-term debt totaling no more than 50% of total capitalization (debt plus shareholder's equity) and a tax rate of at least 25%.

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