Cap Rate Formula

Gross Operating Income[GOI] = Gross Rental Income(GRI) − Vacancy Allowance(VA)

Net Operating Income (NOI) = Gross Operating Income(GOI) − Operating Expenses(OE)

Capitalization Rate(CR) = Net Operating Income(NOI) / Market Value of the Asset(or)Purchase Price

Example

An commerical building which gives a net operating income of $ 100000 is valued at $ 250000.

calculate the capitalization rate of the commerical building is

= 100000/250000 = 40%

Thus, Your building is sold for $ 250000 it can also be said that the building was sold at 40% cap rate.