> For the complete documentation index, see [llms.txt](https://lofty-2.gitbook.io/faqs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://lofty-2.gitbook.io/faqs/glossary/cap-rate.md).

# Cap rate

The cap rate is the Net Operating Income (NOI) divided by the purchase price. The cap rate is an indicator of the risk and return of a property. It tells you the return of an investment before financing costs.