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'Cap Rate' Comparison

March 01, 1987

David Myers' article "Profits and Pitfalls of a Landlord" (Feb. 8) was excellent, but I take exception to his statement that the "cap rate" (annual net income divided by purchase price) can be compared with other returns on investments, such as certificates of deposit.

The purchase price is not the investment and any rate of return should take tax savings into account. Further, for a more complete analysis, the impact of a future sale should be considered.

LEO P. HOLLIDAY

Santa Monica

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