Cap Rate Calculation

[Daniel Peavey]

Do you base the cap rate on what you purchased property for: 

Or, is cap rate based on current market value of home?

Also:  is capital costs included in cap rate

My example:

1. I purchased property for 25 k ( 10 yr ago)

2  My Roi now is 9k

3  The property is worth 95k now

4  Is my Cap Rate based on the original 25 k

Or current market value of 95k?

Note:  I put 25k into capital costs 10 years ago ( mostly material, I did all the work)

Thank you