What does cap rate mean in business?

A cap rate is a ratio that shows the net operating income (NOI) per square foot of an investment. It is calculated by dividing the net operating income by the total square footage of the property. A lower cap rate is better, because it shows that you are making more money on a lower investment.

What does the cap rate mean in real estate?

A cap rate refers to the ratio of an investment’s total net operating income (NOI) to the investment’s purchase price. The lower the cap rate, the more attractive the investment is to potential investors, since it shows that you’re generating a high return on investment relative to the price paid. Let’s break down each component of the cap rate equation.

What is cap rate mean in business?

The capitalization rate (or cap rate) of a commercial property is the ratio of the net operating income (NOI) of the property to the property’s purchase price. The lower the capitalization rate is for a given property, the more attractive it is to potential investors.

What is the cap rate mean in business?

A cap rate is the ratio of net operating income (NOI) to the investment in the property. It's one of the key financial ratios used to determine the profitability of a property. A higher cap rate means you make less on an annual basis per square foot. Lower rates are generally a sign of a good investment, as property owners take less risk for lower returns.

What is the meaning of cap rate in business?

Cap rate is the ratio of net operating income to a property’s total investment, expressed as a percentage. It is calculated by dividing net operating income by the total value of the investment, including both the current value and the value of any future appreciation.