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how to figure cap rate on rental property

1Answers
Diaz
11/28/2025, 06:57:58 AM

To calculate the cap rate for a rental property, divide the property’s Net Operating Income (NOI) by its current market value. The NOI is determined by subtracting all operating expenses—such as property taxes, insurance, and maintenance—from the total annual rental income, excluding mortgage payments. This ratio provides a measure of the property’s potential return on investment.

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