Core indicator
Measure a property's real value
The capitalization rate (Cap Rate) measures a property's performance independently of financing.
It is most useful for comparing properties, testing an asking price and placing an asset against the market.
Recommended illustration
Buildings side by side, plus the cap rate. analysis → understanding → decision.
Method & use
A simple but powerful indicator
The Cap Rate gives a quick read on a property's economic value.
Methodology
Cap rate = Net operating income (NOI) / Purchase price. Expenses must be realistic and normalized.
Utilisation
Compare properties, check an asking price, read transactions and market trends.
Why the Cap Rate is key
Unlike cashflow, the Cap Rate removes the effect of financing and focuses solely on the property's ability to generate income.
- identify an overpriced or underpriced asset
- compare assets of different sizes
- place a property against the local market
Lecture IA
The AI Assistant puts the Cap Rate in context: asset type, area, risk level and consistency with the market.
Calculate the Cap Rate
Placeholder ready to connect to your Django form.
Best practices
- Use a normalized NOI (excluding exceptional expenses).
- Only compare similar assets.
- Do not analyze the Cap Rate in isolation.
Need a point of comparison?
Analyze the Cap Rate, then complete the picture with cashflow and AI.