Capitalization Rate

Definition: the Capitalization Rate is a key metric used in real estate/property investment and similar industries to determine and evaluate the potential return on income-generating properties. Capitalization Rates are used to figure out how much time will be needed to reach a certain level of profit upon an investment.
Put simply, the "Cap Rate" is the Net Operating Income divided by Property Value (the current market price for which the property could be sold or purchased).

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