Capitalization Rate (Cap Rate)
A rate of return that compares the yearly NOI to the purchase price or market value.
Cindy Bellford avatar
Written by Cindy Bellford
Updated over a week ago

What Is It?

A rate of return of a rental property based on comparing the yearly net operating income (NOI) to the purchase price or market value.

Since the cap rate does not take into account loan payments, it can be used to compare rental properties irrespective of financing terms.

How Is It Calculated?

You can learn more about the Cap Rate on our blog.

Did this answer your question?