Cap Rate Calculator
Calculate the cap rate of an investment property from its NOI and price, or the value at a target cap rate, with the gross rent multiplier and expense ratio.
| Cap rate | Value |
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Cap rate = NOI ÷ value, before the mortgage, so it compares properties whatever the financing. Operating expenses include property tax, insurance, management, maintenance, utilities and HOA, but not the loan payment or depreciation.
What it does
The capitalization rate is the yearly net operating income of a property as a share of its price: the return you would get buying it in cash. Investors use it to compare properties and to value them, since value = NOI ÷ cap rate.
How to use it
- Type the price, the gross rent per year and the vacancy.
- Type the operating expenses per year, and a target cap rate if you want a value.
- See the cap rate, the NOI and the value at each cap rate in the table.
The arithmetic runs in your browser. Nothing you type is sent anywhere and nothing is stored, so you can use these with real numbers.
Frequently asked questions
How do I calculate cap rate?
Divide the NOI by the price. Rent of 48,000 a year with 5% vacancy and 15,000 of expenses gives an NOI of 30,600: on a 500,000 property that is a 6.12% cap rate.
How much is a property worth at a given cap rate?
NOI ÷ cap rate. With the same 30,600 of NOI, a buyer who wants 7% would pay 437,143, and at 6% the value is 510,000.
What is a good cap rate?
It depends on the market and the risk: lower cap rates (4% to 6%) are common in big cities and newer buildings, higher ones (8% to 10%) in smaller markets. A higher cap rate means more income for the price, but usually more risk.
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