Cap Rates Defined

Cap rate means “capitalization rate.” Multifamily cap rates are a metric used to evaluate the value of income-producing multifamily properties. Cap rates are expressed as a percentage and represent the expected annual return on investment (ROI) for the property. In simple words “cap rate,” helps buyers determine how many years it will take before their deal provides a return. Cap rates are typically used by real estate investors to compare the value of different multifamily properties and to make decisions about buying, selling, or holding properties.