Cap rate
0.00%
NOI divided by property value.
Real Estate utility
Cap Rate Calculator
Calculate capitalization rate and net operating income from property value, annual rent, and annual operating expenses.
Net operating income
$0.00
Annual rent minus annual operating expenses.
Monthly NOI
$0.00
A quick monthly view of the property's operating income.
What cap rate helps you compare
Cap rate is useful when you want to compare one income property with another on a financing-neutral basis. It strips out the mortgage and looks at the property itself.
A higher cap rate can mean stronger income relative to price, but it can also reflect higher risk, weaker location quality, or more volatile rent assumptions. Use it as a comparison tool, not the only decision rule.
Why cap rate is still one of the first numbers investors check
Cap rate helps you compare properties quickly without getting tied up in the buyer's personal financing structure. That makes it one of the fastest ways to benchmark income properties across a shortlist.
What this calculator is designed to answer
This page is built for the question, "How strong is the property's income relative to its value?" It is not trying to replace a full deal model. It is meant to give you a clean first-pass answer.
Where cap rate can mislead you
A high cap rate can sometimes reflect more risk rather than a better deal. Weak tenant quality, higher turnover, deferred maintenance, or location issues can all push the number up.
Frequently asked questions
What is cap rate in real estate?
Cap rate is the property's net operating income divided by its value or purchase price. It is a quick way to compare the income performance of one property against another before financing is considered.
What expenses belong in NOI?
NOI usually includes recurring operating costs such as maintenance, management, insurance, taxes, vacancy allowance, and similar costs. Mortgage payments are normally excluded because cap rate is meant to be financing-neutral.
Is cap rate the same as ROI?
No. Cap rate focuses on the property's income relative to value. ROI is broader and can include financing, appreciation, sale proceeds, and the total cash you invested in the deal.
Should I use purchase price or current market value?
Either can be useful, depending on the decision you are making. Purchase price is common when analysing a new deal. Current market value can be more useful when reviewing an existing property in your portfolio.
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