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2 - an investment propertys fixed cash flow on an annual basis. The capitalization rate is the rate of return on a real estate investment property based on the income that the property is expected to generate. Understanding Cap Rates The Answer Is Nine Capitalization Rate Exam Answer Understanding C It expresses relationships between income and property value at a specific point in time d It is the rate of return that investors expect to earn on their equity investment. . The capitalization rate cap rate indicates the potential rate of return on a real estate investment taking into account the income that the property is likely to generate by comparing the property value and its NOI. Capitalization rate is the estimated percentage rate of return that a property will produce on the owners investment. Using the above cap rate formula Cap Rate Formula The cap rate formula is calculated by dividing the net operating income by the assets curren...

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