The Capitalization Rate (Cap Rate) is a key metric used in commercial real estate to estimate the potential return on investment for a property. It's calculated by dividing the property's Net Operating Income (NOI) by its current market value or purchase price. A higher cap rate generally indicates a higher potential return and, therefore, a less risky investment, assuming all other factors are equal.
function calculateCapRate() {
var noi = parseFloat(document.getElementById("netOperatingIncome").value);
var propertyValue = parseFloat(document.getElementById("propertyValue").value);
var resultDiv = document.getElementById("result");
if (isNaN(noi) || isNaN(propertyValue)) {
resultDiv.textContent = "Please enter valid numbers for all fields.";
return;
}
if (propertyValue <= 0) {
resultDiv.textContent = "Property value must be greater than zero.";
return;
}
var capRate = (noi / propertyValue) * 100;
resultDiv.textContent = "Cap Rate: " + capRate.toFixed(2) + "%";
}