Capitalisation rate

The Cap Rate is an indicator that expresses the relationship between the annual net operating income (NOI) of a property and its purchase price or market value. It is calculated as the ratio of the NOI to the market value of the property and is expressed as a percentage. The capitalization rate provides investment brokers and investors with a quick view of a property's potential profitability.

Other terms from the category

Net yield

The net return removes operating costs from the gross return equation and therefore provides a cleaner picture of the actual profit generate...

The internal rate of return (IRR)

The internal rate of return (IRR) is the discount rate at which the net present value of all future cash flows from an investment (i.e. inco...

Property tax

Property tax is a type of tax paid by property owners. It applies to commercial properties as well as residential properties and agricultura...

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