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Cap Rate = NOI / Value

The capitalization rate is one of the most fundamental, yet least understood concepts in the commercial real estate industry. A cap rate measures a property’s return over a single year without taking into account debt on the asset, making it a useful metric to compare the value of different properties. This post will examine the concept behind cap rates, and hopefully clear up a few common misunderstandings.

Cap Rate Definition

The capitalization rate (cap rate for short), is the ratio of Net Operating Income (NOI) to asset value or purchase price. …

Real Excel Icon
Real Excel Icon

Excel is an extremely powerful tool for real estate professionals, and (at least on paper) nearly everyone knows how to use it. In real estate, being able to quickly sift through data and underwrite deals in Excel is the number one skill a starting analyst must have — and for an employer, having a skilled analyst can mean the difference between a rapidly growing real estate investment portfolio and a trail of sadly missed or unprofitable deals.

As of December 31st, 2016 there were 73,731 licensed, active real estate appraisers in the United States.


Marc Rutzen

At the intersection of Real Estate and Technology

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