Exam term
Capitalization rate
The rate used to convert annual net operating income into value: value equals NOI divided by the rate. A higher rate gives a lower value. Also called a cap rate; it is not a mortgage interest rate.
Lessons that use this term
- The income approach and capitalization California
- Financial analysis of income property: cash flow, returns, and leverage California
- The income capitalization approach Florida
- Real estate as an investment: analysis, risk, and leverage Florida
- Highest and best use, site valuation, and the three approaches to value New York
- Valuation by capitalization and the cap rate New York
- The income approach and gross rent and gross income multipliers Texas
- Valuation math: CMA, net operating income, capitalization rate, equity, and property tax Texas
- Investment and property management math: return, appreciation, depreciation, and rents Texas