What expenses are included in your NOI?
Property taxes, insurance, management at market rate, routine maintenance, capital reserves, vacancy allowance, owner-paid utilities and HOA dues. Mortgage payments are excluded by definition.
Methodology
How we estimate cap rate
Cap rate is net operating income divided by purchase price, where NOI excludes financing entirely. We build NOI from the verified tax bill, documented insurance, market-rate management and reserves set against real condition — then compare the result only to properties of the same type in the same submarket.
What this is
- What it is
- The documented method behind the cap rate shown in a Property Intelligence brief.
- Who it is for
- Investors comparing properties, and owners testing whether an asking price is defensible.
- The problem it solves
- Cap rates are quoted without saying which expenses were included. Two cap rates built differently are not comparable, and most listing cap rates are built generously.
What the method requires
Net operating income
Built line by line from verified taxes, documented insurance, market management and condition-based reserves.
Purchase price or value
The contract price where one exists; otherwise the value the comparable evidence supports.
Local comparison set
Same property type, same submarket, recent transactions only.
The method, step by step
01
Build NOI without financing
Gross income less vacancy and all operating expenses. The mortgage is deliberately excluded.
02
Divide by price
NOI divided by purchase price, or by supported value when there is no contract.
03
Compare locally
Benchmark only against the same property type in the same submarket over a recent window.
04
State the basis
The brief shows which expenses were included so the figure can be checked.
What we will not do
- We do not compare cap rates across markets as though they measure the same risk.
- We do not exclude management from NOI just because the owner self-manages.
- We do not publish a cap rate without publishing the expense lines that produced it.
Questions about this method
Why does your cap rate differ from the listing's?
Listing cap rates commonly omit management, reserves or vacancy. Ours includes all three, so it is usually lower and closer to what an owner actually experiences.
What to read next
See this method applied to one address
Property Intelligence™ runs this method against verified records, the documents you upload and professional review — then states a recommendation, its confidence, and exactly what is still missing.