GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

How often this word is used
 
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50% - Moderately

Capitalization Rate


Synonyms:estimated value, rate of return
Filed Under: financial-banking, investments, real-estate
Tags: banking, investment, rates, realty
 

Definition of capitalization rate

capitalization rate
1. The estimated percentage rate of return that a property will produce on the owner's investment.

Related Terms and Acronyms:

  • commercial property   A parcel in a district zoned for business.
  • internal rate of return (IRR)   That rate at which the present worth of all present and future investment costs equals the present worth of all present and future investment benefits.
  • rate   Percentage a borrower pays for the use of money, usually expressed as an annual percentage.
  • rate of return (ROR, RR)   The profit an investment generates, expressed as equity divided by cash flow.
  • return on investment (ROI)   The profit an investment generates, expressed as equity divided by cash flow.

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