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Real Estate Glossary

Cap Rate

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Written by Luis Escobar

Also referred to as capitalization rate, this refers to the value of a property when the (NOI) or net operating income is divided by the current market valuation or sale price. A lower cap rate means that the income is more expensive than the property. This can be utilized as an indicator of how fast an investment can pay for itself.

Also referred to as capitalization rate, this refers to the value of a property when the (NOI) or net operating income is divided by the current market valuation or sale price. A lower cap rate means that the income is more expensive than the property. This can be utilized as an indicator of how fast an investment can pay for itself.

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Luis Escobar

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