Ray Alcorn does a great job in his article detailing the Capitalization CAP rate.  There is a solid example to illustrate or determine the CAP rate, and how it can or will apply to the commercial real estate investor.   The key factor of the CAP is determining the NOI (net operating income) and how this is a factor.  The Mr. Alcorn’s full article may be viewed at:  http://www.creonline.com/articles/art-216.html