Definition Capitalization Rate. Description.
The Capitalization Rate is a ratio used to determine the value
of income producing 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 the sales
price or value of a property expressed as a percentage. Investors, lenders
and appraisers can use the Cap Rate to estimate the purchase price for different
types of income producing properties.
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3 Minute Introduction to Financial Ratio Analysis: Why do it and What are the Main Types?
Types of Financial Ratios, Financial Ratio Analysis, Financial Ratio Types...
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Compare also: Payback
Period
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Special Interest Group Leader
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