Capitalisation Rate
capitalisation rate=gross yield-expense rate: This number gives you the intrinsic profitability of the property, independent of the financing you choose. As a expense net yield, it also tells you what is the margin of safety of the property as an investment. Capitalisation rate measures how this investment value grows if the property is bought cash. The income net of expenses is also called ebitda (earning before interest tax and depreciation), and the cap rate is also called the ebitda yield of the rental activity.
This is one of the property key profitability measures..
