Cap Rate Calculator

Calculate capitalization rate for investment properties.

Evaluate rental property returns

Purchase Price ($)

Annual Gross Rent ($)

Annual Expenses ($)

Formula

Cap Rate = NOI / Purchase Price × 100

How to Use

1
Enter property value — Input the purchase price or current market value.
2
Enter annual NOI — Input Net Operating Income (rental income minus operating expenses, excluding mortgage).
3
Calculate cap rate — Cap Rate = NOI ÷ Property Value × 100.
4
Compare properties — Use cap rate to objectively compare investment opportunities.

5-10% is typical. Higher cap rates mean higher returns but often higher risk. Class A properties in prime locations may have 3-5% cap rates.

NOI = Gross rental income − operating expenses (taxes, insurance, maintenance, management). It does NOT include mortgage payments.

Cap rate ignores financing — it measures the property's return. Cash-on-cash measures return on YOUR cash invested including the mortgage effect.

Not necessarily. Higher cap rates often indicate higher risk areas, older properties, or markets with less appreciation potential.

Calculate return on invested cash.

Quick property comparison metric.

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