Real Estate Investing Glossary

Plain-language definitions of every term you’ll see inside VeraFinder. Each entry opens with a one-sentence definition that stands on its own.

• Cap Rate

  Also: Capitalization Rate

  Cap Rate (Capitalization Rate) is the unleveraged annual return on a real estate investment, calculated as Net Operating Income divided by the property’s purchase price. For a $400,000 property with $32,000 NOI, Cap Rate = 8%.

• Cash-on-Cash Return

  Also: CoC Return

  Cash-on-Cash Return is the annual pre-tax cash flow divided by the total cash invested (down payment + closing costs + initial repairs). It measures the actual return on the investor’s out-of-pocket capital, unlike Cap Rate which ignores financing.

• Net Operating Income

  Also: NOI

  Net Operating Income (NOI) is a property’s gross annual rent minus all operating expenses, excluding mortgage payments, depreciation and capital improvements. NOI is the numerator in the Cap Rate formula.