A rate of return on an investment as a percent.
A cap rate in its simplest form is a return on an investment based on the principle of anticipation. The cap rate in its simplest form represents the yield of a property over a one-year time horizon assuming the property is purchased on cash and not on loan. The capitalization rate indicates the property’s intrinsic, natural, and unlevered rate of return. A cap rate attempts to quantify the risk profile of the future benefits. By converting income into value, a cap rate expresses the relationship of one year's income and value.
Cap rate in Delve’s financial model expects an overall rate. The common range of profit on cost for a typical project is between 4% and 10% (the number will vary depending on the location of the property as well as the rate of return required to make the investment worthwhile)
How this is used