In New Hampshire, what does "cap rate" measure?

In New Hampshire, "cap rate," short for capitalization rate, is a critical metric used to evaluate the profitability of an investment property. It is calculated by dividing the net operating income (NOI) of the property by its current market value or acquisition cost. The cap rate provides insight into the expected return on an investment based on the income it generates relative to its value.

This metric is useful for investors as it allows them to compare different investment opportunities and assess whether a property is likely to meet their investment criteria. The higher the cap rate, the more potential profit relative to the property's value, which can make it an attractive investment.

Options discussing property tax rates and mere ratios of rental income to property values do not capture the comprehensive measure that the cap rate provides regarding profitability and investment evaluation. While the cap rate does relate to rental income, its primary purpose is to give a broader overview of the investment's financial performance.