Capitalization Rate (Cap Rate)
Annual net operating income as percentage of property value
FORMULA
Cap Rate = (Net Operating Income / Property Value) × 100
Alternate Calculations
Inverse
1 / Cap Rate = Price-to-Income MultipleWhat is Capitalization Rate?
Capitalization Rate measures the return on investment for real estate properties, calculated as Net Operating Income / Property Value. Used for property valuation and investment analysis.
Higher cap rates indicate higher income relative to price (better value); lower cap rates indicate premium/stabilized properties. Market varies by property type and location.
Chart
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290,000noi · Q4Capitalization Rate
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Sample Data
| quarter | noi | value | cap_rate |
|---|---|---|---|
| Q1 | 250,000 | 3,500,000 | 7.14 |
| Q2 | 260,000 | 3,600,000 | 7.22 |
| Q3 | 275,000 | 3,700,000 | 7.43 |
| Q4 | 290,000 | 3,900,000 | 7.44 |
Required Data Columns
noiproperty_valuecap_rate