Cap Rate Calculator

Calculate the capitalization rate for any investment property. Compare NOI to property value to evaluate returns independent of financing.

Property
$
Income
$
%
National average: 5-7%
Annual Operating Expenses
$
$
$
$
$
$
Cap Rate
5.21%
Fair
Net Operating Income
$15,640
per year
Gross Rent Multiplier
11.4x
lower is better
Expense Ratio
37.64%
of effective gross
NOI Breakdown
Gross Annual Rent$26,400
Vacancy Loss (5%)- $1,320
Effective Gross Income$25,080
Property Taxes- $3,600
Insurance- $1,400
Maintenance- $1,800
Management- $2,640
Total Operating Expenses- $9,440
Net Operating Income (NOI)$15,640
Property Value at Different Cap Rates
Based on your NOI of $15,640, what would this property be worth at various cap rates?
4% cap
$391,000
5% cap
$312,800
6% cap
$260,667
7% cap
$223,429
8% cap
$195,500
10% cap
$156,400

What Is Cap Rate?

The capitalization rate (cap rate) measures a property's annual return independent of financing. It divides the Net Operating Income (NOI) by the property's current market value or purchase price. Unlike cash-on-cash return, cap rate ignores mortgage payments, making it useful for comparing properties regardless of how they're financed.

The formula: Cap Rate = (Net Operating Income / Property Value) x 100

A "good" cap rate depends on the market. In high-demand coastal cities, 4-5% might be strong. In midwestern markets, landlords often target 7-10%. The cap rate reflects risk: higher cap rates typically mean higher risk (and potentially higher returns), while lower cap rates suggest more stability.

Want to factor in financing? Use the Cash-on-Cash Return Calculator. For a full 10-year equity projection, try the Rental ROI Calculator, or manage your rental finances with RentalSlate for free.