Cap Rate Calculator

Calculate cap rate for any investment property. Free capitalization rate calculator with NOI computation. Evaluate rental property returns instantly.

Property Details

Purchase Price

Monthly Gross Rent

Operating Costs

Vacancy Rate

Typical: 5-10% for residential properties

Annual Operating Expenses

Include taxes, insurance, maintenance, management

Cap Rate

7.5%

Average — Typical for stable markets

How It's Calculated

Cap Rate = NOI / Purchase Price

Cap Rate (Capitalization Rate) measures the return on a property without considering financing. Higher cap rates typically indicate higher risk or lower-demand areas.

NOI Calculation

Annual Gross Rent$30,000

Vacancy Loss (5%)-$1,500

Effective Gross Income$28,500

Operating Expenses-$6,000

Net Operating Income (NOI)$22,500

Cap Rate Benchmarks

Class A Properties4-6%

Class B Properties6-8%

Class C Properties8-10%+

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Frequently Asked Questions

What is cap rate?

Cap rate (capitalization rate) is a real estate metric that measures a property's potential return on investment. It's calculated by dividing the Net Operating Income (NOI) by the property's purchase price or market value.

What is a good cap rate?

A good cap rate varies by market and property type. Generally, 5-10% is considered acceptable. Higher cap rates indicate higher risk and potentially higher returns, while lower cap rates suggest lower risk in stable markets.

How do I calculate cap rate?

Cap Rate = (Net Operating Income / Property Value) × 100. First, calculate NOI by subtracting operating expenses from gross rental income. Then divide by the property's purchase price.

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