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Cap Rate Explained: How to Calculate a Commercial Property's Return

A plain-language explanation of cap rate and how to use it when evaluating a commercial property.

cap rate explained 4 key sections Commercial Real Estate
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Article Overview

A plain-language explanation of cap rate and how to use it when evaluating a commercial property.

What This Article Covers

This SellBusiness resource focuses on cap rate explained . The source content brief identifies the following key areas for this article.

01

Formula

02

Example calculation

03

What a "good" cap rate looks like

04

Limitations of cap rate

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Content Category

Commercial Real Estate

Commercial property buyers and investors.

Related Topics

cap rate explained how to calculate cap rate

This information is general in nature. Business purchases, sales, financing, tax, legal and commercial real estate matters can vary by transaction. Professional advice should be obtained where appropriate.