Cap rate (capitalisation rate) = Net Operating Income ÷ Property value × 100. It is the unlevered annual return a property would produce if bought outright. A higher cap rate means a higher yielding (often higher risk) deal.
Cap rate
0%
Gross annual rent
0
Effective gross income
0
Total expenses
0
NOI (Net Operating Income)
0
Gross yield
0%
Verdict
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What's a "good" cap rate?
3 – 4% — Class A commercial in metros / very low risk (often considered low yield)
5 – 7% — Typical residential rentals in Tier-1 cities