Real Estate Investing
Capitalisation Rate
Definition
What is Capitalisation Rate?
Net operating incomeProperty revenue minus normal operating expenses, before financing and tax. divided by propertyLand and buildings held for use, rent, development, or capital appreciation. value.
Example in practice
How This Looks in Practice
₦5 million NOI on a ₦50 million property gives a 10% cap rate.
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Related Terms
Real Estate Investing
Real Estate
Land and buildings held for use, rental income, development, or appreciation.
Real Estate InvestingResidential Property
Property designed mainly for people to live in.
Real Estate InvestingCommercial Property
Property used for business purposes, such as offices, shops, or warehouses.
REIT MetricsFunds from Operations
A REIT performance measure that adjusts net income for real-estate depreciation and certain property-sale gains.