True Cap Rate
The true cap rate divides NOI rebuilt on real economics — actual landlord expenses, reserves, realistic vacancy — by price. It's the yield you actually keep, unlike the broker cap.
The true cap rate is the going-in yield computed on the NOI you will actually keep: gross income minus real landlord expenses, replacement reserves, and a realistic vacancy/credit-loss assumption — divided by price.
It contrasts with the broker cap rate, which divides the headline (gross, often pre-reserves) NOI by price and is therefore always the higher, more flattering number.
Why it matters: the spread between broker cap and true cap is where the asking price gets justified. Underwrite to the true cap; quote the broker cap only to understand the seller's framing.
See the full mechanic in Broker Cap vs True Cap, or see both side by side on any deal with the cap-rate calculator. UpsideIQ grades every deal on the true cap, not the headline.
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