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Calculator
Call and put profit or loss at expiration.
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Money — Real Estate
Cap Rate Calculator
Enter a property’s value, annual rental income and operating expenses to get its capitalization rate and net operating income.
Capitalization rate
—
Net operating income ÷ property value.
| Net operating income NOI | — |
|---|---|
| Monthly NOI | — |
| Annual income | — |
| Annual expenses | — |
Show our math
Enter your figures above to see the step-by-step working.
NOI excludes the mortgage — a like-for-like income yieldEverything computed client-side — nothing leaves this page
How the Cap Rate Calculator Works
The capitalization rate is a property’s annual net operating income as a percentage of its value or price. Net operating income (NOI) is the yearly rental income minus operating expenses — but not the mortgage. The calculator subtracts expenses from income to get NOI, then divides by the property value.
Cap rate lets you compare income properties on a like-for-like basis, independent of financing. A higher cap rate means more income per dollar of price, but often more risk; prime, low-risk properties tend to trade at lower cap rates.
cap rate = net operating income ÷ property value × 100
Frequently Asked Questions
What is a good cap rate?
It varies by market and property type, but many rental investors look in the 5% to 10% range. Higher cap rates suggest more income relative to price, and usually more risk; lower cap rates reflect safer, premium assets.
Does NOI include the mortgage?
No. Net operating income is income minus operating expenses only — taxes, insurance, maintenance, management and vacancy. Mortgage payments are financing, not an operating expense, so they are excluded from the cap rate.
How is cap rate different from ROI?
Cap rate measures a property’s unleveraged income yield against its value. Return on investment reflects your actual cash outcome including financing, appreciation and your own cash invested, so the two can differ widely.
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