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Cap Rate

Capitalization Rate - the ratio of a property's [net operating income (NOI)](/glossary/#noi) to its current market value or purchase price. A 6% cap rate means the property generates $60,000 NOI annua

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Capitalization Rate - the ratio of a property's net operating income (NOI) to its current market value or purchase price. A 6% cap rate means the property generates $60,000 NOI annually on a $1,000,000 value. Used to compare investment properties regardless of financing. See also DSCR and Cash-on-Cash Return.

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