Cap Rates and Income Yields

Cap-rate and yield pages translate property income into investor return expectations. Use this section for income yield measures, cap-rate variants, and real-estate return-rate labels.

In this section

• Capitalization Rates and OAR
  Capitalization-rate terms used to value income property and compare required real estate returns.
  • CAP RATE: Capitalization Rate
    A comprehensive overview of Capitalization Rate (CAP RATE), its calculation, applicability in real estate, and related concepts.
  • Current Cap Rate: Key Metric in Real Estate Investments
    Understanding the Current Cap Rate as a Crucial Metric for Assessing Real Estate Investments.
  • Going-In Cap Rate: Initial Capitalization Rate
    A comprehensive look into the Going-In Cap Rate, an important metric in real estate investment, including its definition, calculation, historical context, types, significance, and practical examples.
  • Overall Rate of Return (OAR): Appraisal Shorthand for a Property's Overall Capitalization Yield
    Learn what OAR means in real-estate appraisal, how it relates to cap rate, and why the same NOI supports different values at different OARs.
  • Terminal Capitalization Rate: The Exit Cap Rate Used to Estimate Resale Value
    Learn what the terminal capitalization rate means in real estate valuation and how it affects estimated resale value at the end of a holding period.
• Property Income and Equity Yields
  Property income-yield terms used to compare rental yield, initial yield, and equity yield measures.
  • Equity Yield Rate: The Return Earned on the Investor’s Own Capital
    Learn what the equity yield rate measures, why it is most often used in real estate and leveraged investments, and how it differs from cash-on-cash return and IRR.
  • Gross Rental Yield: The Annual Rental Income Divided by the Property's Value
    Gross Rental Yield is a financial metric used to evaluate the annual rental income generated from a property as a percentage of its total value. This metric is crucial for real estate investors.
  • Initial Yield: Gross Annual Income from an Asset Divided by Initial Cost
    An in-depth exploration of Initial Yield, a crucial financial metric representing the gross annual income from an asset divided by its initial cost. Includes historical context, types, key events, explanations, and more.