Now that I have provided you with details of what yield is being a measurement of income derived from an investment
Your other newly found pet phrase CAP RATE, which is used to determine the value of an asset
BUT not how you fasley claim
http://www.caprates.net/cap-rate-definition.htm
Cap Rate Definition
Commercial Real Estate
Year 1 NOI = Cap Rate
PRICE
A capitalization rate is simply the rate of Year 1 Expected Net Operating Income / Price. Future expectations - beyond Year 1 - are not mathematically involved in the intentionally-simple Cap Rate math.
OR THIS http://en.wikipedia.org/wiki/Capitalization_rate
Capitalization rate (or "cap rate") is a measure of the ratio between the net operating income produced by an asset (usually real estate) and its capital cost (the original price paid to buy the asset) or alternatively its current market value. The rate is calculated in a simple fashion as follows:
annual net operating / cost (or value) = Capitalization Rate For example, if a building is purchased for $1,000,000 sale price and it produces $100,000 in positive net operating income (the amount left over after fixed costs and variable costs are subtracted from gross lease income) during one year, then:
$100,000 / $1,000,000 = 0.10 = 10% The asset's capitalization rate is ten percent
Here's How: Get the recent sold price of an income property, such as an apartment complex. Example: Six unit apartment project sold for $300,000
For that same apartment project, determine the net operating income, or the net rentals realized by the owners. Example: The rental income after expenses (net) is $24,000
Divide the net operating income by the sale price to get cap rate. Example: $24,000 / $300,000 = .08 or 8% (The Capitalization Rate)
