Cap Rate

Cap rate is a shorthand yield on a real estate investment, assuming no mortgage financing. Calculate it as net operating income (NOI) ÷ purchase price or current market value. A property generating $50,000 NOI at a $1,000,000 price has a 5% cap rate.

Cap rates let investors quickly compare properties and markets. Lower cap rates usually mean stronger locations or safer income streams (and lower yield); higher cap rates suggest riskier assets, weaker markets, or more upside. Cap rates don't account for leverage — pair them with cash-on-cash return for financed deals.

Why it matters for Milo customers

Cap rate matters when sizing a Milo DSCR loan — lenders need rental income to comfortably cover debt service. Crypto investors using Milo to buy rental property typically target cap rates of 6%+ to leave underwriting cushion.

---