One of the most common terms you’ll hear in real estate investment and finance is “cap rate”, which is short for capitalization rate. The cap rate is defined as the property’s net operating income or NOI after expenses, divided by the value or the estimated value of the property. Learn why this is an important concept in real estate investing in this short video.

Presented by Bisnow with Professor Peter Linneman from the Wharton School of the University of Pennsylvania. This clip is from the Bisnow series called “Everything you Always Wanted to Know About Real Estate, But Were Afraid to Ask.

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