Capitalization Rate (Cap Rate) Calculator
The Capitalization Rate, or Cap Rate, is a crucial metric in commercial real estate investment. It represents the ratio between the net operating income (NOI) generated by a property and its market value. Essentially, it tells you the potential rate of return on a real estate investment if it were purchased with cash.
A higher Cap Rate generally indicates a higher potential return and, conversely, a lower risk, assuming comparable properties. However, it's important to note that Cap Rate doesn't account for financing or capital expenditures, and should be used in conjunction with other investment analysis tools.
function calculateCapRate() {
var noi = document.getElementById("netOperatingIncome").value;
var propertyValue = document.getElementById("propertyValue").value;
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
// Input validation
if (isNaN(noi) || noi === "" || isNaN(propertyValue) || propertyValue === "") {
resultDiv.innerHTML = "Please enter valid numbers for Net Operating Income and Property Value.";
return;
}
if (parseFloat(propertyValue) <= 0) {
resultDiv.innerHTML = "Property Value must be greater than zero.";
return;
}
var capRate = (parseFloat(noi) / parseFloat(propertyValue)) * 100;
resultDiv.innerHTML = "
Your Capitalization Rate:
" + capRate.toFixed(2) + "%";
}
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