Cap Rate Calculator
Calculate the capitalization rate for your rental properties. Compare investment opportunities and determine property values based on income.
Annual income minus operating expenses (excluding mortgage)
Enter target cap rate to calculate property value
How the Cap Rate Calculator Works
Calculate NOI
Determine your Net Operating Income (annual rent minus expenses).
Enter Property Value
Input the current market value or purchase price of the property.
Get Cap Rate
See your capitalization rate and compare with market standards.
Understanding Cap Rate
What is Cap Rate?
Capitalization rate (cap rate) is the ratio of Net Operating Income to property value. It helps investors compare different investment opportunities and assess risk.
Cap Rate Formula:
Cap Rate = (Net Operating Income ÷ Property Value) × 100
What's a Good Cap Rate?
Frequently Asked Questions
What is Net Operating Income (NOI)?
NOI is the annual income from a property minus all operating expenses, excluding mortgage payments, depreciation, and income taxes. It includes rent, other income, minus property taxes, insurance, maintenance, utilities, and management fees.
Why is cap rate important?
Cap rate helps investors compare different investment opportunities, assess risk, and determine if a property is priced appropriately. Higher cap rates generally indicate higher risk but potentially higher returns.
How do I calculate NOI?
NOI = Annual Rental Income + Other Income - Operating Expenses. Operating expenses include property taxes, insurance, maintenance, utilities, property management fees, and HOA fees. Do not include mortgage payments or depreciation.
What affects cap rates?
Cap rates are influenced by location, property type, market conditions, interest rates, and perceived risk. Properties in high-demand areas typically have lower cap rates, while properties in less desirable areas have higher cap rates.
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