How do I determine the Cap rates for a property?

[Ralph Noack]

Just trying to analyze a deal but the calculator is asking me for the cap rate. I do not know what it is for this area/property. Can someone help me out please. Property is a set of townhouses in Ontario, Canada.

[Paolo Agostinelli]

Cap Rate is based on yearly Net Operating Income (NOI). NOI is calculated by subtracting income from your expenses. Start with gross rents, then subtract vacancy, prop mngt, taxes, insurance, utilities, repairs, capital expeditures, etc. Do not include the debt service (your mortgage paymet) in this calculation. Once you have your NOI, divide by purchase price to find cap rate. NOI = Income - Expenses CAP Rate (%) = NOI / Purchase Price