Calculations are estimates only and do not constitute financial advice. Actual rates, fees, and eligibility may vary by lender. Always consult a licensed mortgage professional.
Calculations are estimates only and do not constitute financial advice. Actual rates, fees, and eligibility may vary by lender. Always consult a licensed mortgage professional.
Evaluate property investment value using capitalization rate, NOI, and gross rent multiplier.
Monthly: AED 10,000
Desired cap rate for scenario analysis
Cap Rate
4.4%
Below 5% — consider negotiating
Net Operating Income
AED 88,000
Gross Rent Multiplier
16.67x
High — verify rents
Total Expenses
AED 26,000
AED 1,257,143
AED 742,857 below current ask
AED 174,737/yr
AED 14,561/month
Low risk, prime locations
Moderate, balanced
Higher yield, more risk
Value-add / distressed
The capitalization rate (cap rate) is one of the most widely used metrics in real estate investing. It measures the expected rate of return on a property based on its net operating income (NOI) relative to its purchase price, giving you a quick way to compare investment opportunities.
Cap rates vary significantly by property type. Single-family rentals typically range from 4-6%, multifamily apartments 5-8%, commercial retail 6-9%, and industrial/warehouse properties 7-10%. Prime locations in major cities often have lower cap rates (2-4%) due to lower perceived risk and higher demand.
A higher cap rate suggests higher potential returns but also higher risk — the property may be in a less desirable location, require significant maintenance, or have less stable tenants. Conversely, a low cap rate indicates a safer, more stable investment with lower returns, often found in established neighborhoods with strong tenant demand.