The Capitalization Rate (Cap Rate) is calculated by dividing a property's Net Operating Income by its market value or purchase price. A 5.5% cap rate on a $2 million apartment building means $110,000 annual NOI. Cap rate is a standardized metric for comparing multifamily investments independent of financing structure, with higher cap rates generally indicating higher risk or better value.
Related Articles
- Cap Rate Analysis for Real Estate Investors
Master cap rate analysis to evaluate rental properties, calculate NOI, and compare deals. Essential metrics for Canadian real estate investors.
- Cap Rates by Property Type & Market in Canada: Complete Guide
Get current Canadian cap rates by property type and city. Learn how cap rates affect commercial mortgage qualification and what the numbers mean for your deal.
- Childcare and Daycare Centre Commercial Mortgage in Canada: Financing Guide
How to finance a childcare or daycare centre purchase in Canada — government subsidy income, licensing, CSBFP eligibility, and lender requirements.
- Commercial Property Appraisal Methods Canada: Income, Cost & Comparison Approaches
Learn how commercial property appraisals work in Canada — income, cost, and direct comparison approaches — and how they affect your mortgage qualification.
- Boost NOI on Commercial Properties & Qualify for Larger Loans
Proven strategies to increase Net Operating Income on Canadian commercial properties, improve DSCR, and access better mortgage financing.