## What is a cap rate and how is it calculated

18 Oct 2019 CAP Rate Formula Definition: CAP rate Formula: CAP rate = Net Operating Income (NOI) / Building value (BV). For example, say

There are two common formulas you can use to calculate the cap rate. The first formula, presented below, is the simple ratio of the property's expected annual  In essence, the CAP rate provides investors with a simple formula for estimating profitability before buying. Making the CAP Rate Calculation. Learn how to  Cap rate is calculated by the Net Operating Income or NOI, divided by the purchase price or value of a  Use this cap rate calculator to calculate: Capitalization rates on your rental property; Potential cash on cash return for investment property; Rents and expenses

## A cap rate is a calculation used to determine the profitability of a real estate investment. In essence, the cap rate is the net operating income (NOI) of a property in relation to the property’s asset value.

Use this cap rate calculator to calculate: Capitalization rates on your rental property; Potential cash on cash return for investment property; Rents and expenses  Real estate investment calculator solving for capitalization rate given net operating income and value or cost. The equity capitalization rate is determined by taking the net operating income of a property and dividing it by the sales price. For instance, if you were buying a  It is a solid indicator of profitability. The cap rate of a property equals the net operating income (NOI) divided by the value of the property to arrive at a percentage. 5 Oct 2018 Learn how to calculate cap rate to evaluate if you are making a sound decision for your potential investment property.