What real-estate term describes the estimated annual income from a property divided by its current value?

The real-estate term for estimated annual property income divided by current value is capitalization rate.

Often called the cap rate, it is calculated by dividing a property's net operating income by its purchase price or market value. A property producing $50,000 in net operating income and valued at $1 million has a 5% cap rate.

Investors use cap rates to compare income-producing properties and to estimate value from expected income. The calculation normally excludes mortgage payments, depreciation, and income taxes, which distinguishes it from measures of an owner's actual return.

Cap rates vary with location, property type, interest rates, risk, and expected growth. A higher cap rate can indicate greater perceived risk, but it does not automatically mean a better investment.