Capitalization Rates (Cap Rates) in Commercial Real Estate
The capitalization rate, or cap rate, is calculated by dividing the net operating income of a property by its market value. This is the key tool appraisers use to determine the value of a commercial property and is the key metric behind the income capitalization approach to valuation.
O&M: Operating and Maintenance Expenses in Commercial Real Estate
O&M refers to operating and maintenance expenses; such as property and liability insurance premiums, utility installation charges and deposits, maintenance equipment, purchase of office equipment and furniture, congregate items, advertising expenses, management fees, etc.