Share:
Glossary Finance

Cap rate

The capitalization rate is a rental property's yearly net operating income divided by its price, a quick measure of its income yield.

Last reviewed:

AdSense Placeholder
Slot: header_reference_page

In more detail

A $250,000 property with $16,000 of net operating income (rent minus operating costs, before mortgage payments) has a cap rate of 6.4%. Cash-on-cash return instead compares yearly cash flow with the cash you invested.

Try these tools

Rental Property Calculator

The Rental Property Calculator evaluates the financial viability, cash flow.

See also

  • Glossary Return on investment (ROI)
    Return on investment (ROI) is the gain or loss on an investment as a percentage of what was invested.
  • Glossary Equity
    Equity is the part of an asset you truly own: its current value minus what you still owe against it.
Back to Glossary
AdSense Placeholder
Slot: footer_leaderboard