In one sentence
Net operating income divided by property value, the market's shorthand for pricing income-producing real estate.
The longer version
A property producing $700K of NOI valued at a 7% cap rate is worth $10M. Cap rates move with interest rates, property type, market, and asset quality, and small cap rate moves swing values hard: the same NOI at 6% is worth $11.7M.
For lenders the cap rate is an input to check, not a given. Appraisal review asks where the rate came from and whether the comparable sales actually compare.
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