Typically referred to as cap rate, is the rate of return based on the income that the property is expected to generate. The cap rate is calculated by dividing the property’s net operating income (NOI) by the current market value or acquisition cost of a property (cap rate = NOI / Current market value). For example, a 200-unit apartment community with a NOI of $742,245 that was purchased for $12,200,000 has a cap rate of 6.1%.
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