Catherine BellEmpowering Women to Create Financial Freedom Through Passive Income, Real Estate, and Social Impact

Unlock Real Estate Profits: NOI & Cap Rate Explained! #shorts

6 Jun 2026 · 1 min

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0:48

In this short instructional video, the speaker walks through a real‑estate financial example to illustrate how Net Operating Income (NOI) and the capitalization (cap) rate are used to value a property. The speaker states that the stabilized building’s NOI is $131,000 and explains that the cap rate represents the annual return you would earn if you invested the property’s value elsewhere, such as a bank CD. By comparing a 4% CD rate (2% over six months) to a 6.5% cap rate, the speaker shows how the cap rate translates into a property value, using simple arithmetic to demonstrate the relationship between NOI, cap rate, and valuation.

Chapters

Are you in the deal room? Keep going. So right here it shows that our stabilized building NOI is gonna be $131,000. And if we do that based on the cap rate, now cap rate is how much you're going to get. Like if you were to take that money and put it in the bank and then the bank pays you back $135,000 or $131,000 a year, that cap rate is right there. So the bank is right now paying 4% on a 6-month CD, right? 4% per year. So that means over 6 months you're going to get 2%. So if I put $1 million in there, I'm only going to get $20,000 back. Right. Right. Or is that, is that right? $200,000 back. No, something like that. With it at a 6.5%, I'm going to get 6.5% back, right, over the year. So this is how we end up with a value to the property.