Calculating Property Value based on NOI (Net Operating Income)

[Rick L.]

I'm formulating a spreadsheet to assist me in quickly analyzing potential rental properties. I would like to calculate the property value based on NOI using the following formula:

• Property Value = Net Operating Income/ Capitalization Rate

I'm confused as to why a higher Cap Rate would decrease the property value.  Wouldn't a higher Cap Rate make the property more desirable?  In this case it decreases the value.  What am I missing here?