The Cap Rate, or Capitalization Rate, is a real estate metric used to evaluate the profitability of an investment property. It is calculated by dividing the property's net operating income (NOI) by its current market value or purchase price. A higher Cap Rate indicates a potentially higher return on investment, while a lower Cap Rate suggests a lower return. Investors often use the Cap Rate to compare different properties and assess their risk levels. It helps in determining whether a property is priced appropriately based on its income-generating potential. Understanding the Cap Rate is essential for making informed real estate investment decisions.