Jan 13, 2026 · In the most popular formula, the capitalization rate of a real estate investment is calculated by dividing the property's net operating income (NOI) by the current market value: …

The Cap Rate or Capitalization Rate formula is straightforward. The calculation is done by dividing the net operating income by the asset’s current market value and percentage.

Feb 27, 2025 · A cap rate is determined by dividing the property’s NOI (net operating income) by the market value of the commercial property in question and then adding a multiplier to determine the …

Learn the capitalization rate (cap rate)—its formula, calculation, and role in valuing real estate investments, risk assessment, and return potential.

Jan 3, 2025 · The formula for calculating the cap rate is simple and elegant: Cap Rate = (Net Operating Income ÷ Current Market Value) × 100. This formula allows investors to express the cap rate as a …

Mar 10, 2025 · Cap rate, short for capitalization rate, is a metric that real estate investors use to estimate the rate of return on an investment property. It reflects the potential profitability of a property by …

Aug 30, 2025 · It is calculated by dividing a property’s Net Operating Income (NOI) by its value. Commercial real estate professionals use cap rates primarily as a valuation shortcut. It is a way to …

What is the cap rate definition? What is the cap rate formula? How to calculate the cap rate? How to evaluate your property with its capitalization rate? How does a change in net income affect the value …

Jun 27, 2024 · The formula for calculating the cap rate divides net operating income (NOI) by the market value of a property, as of the present date. Cap Rate (%) = Net Operating Income (NOI) ÷ Property …