Cap Rate Calculator

Your details

Solve forward for the cap rate, or reverse solve for the value or NOI you need.
Either type a known NOI, or have the calculator derive it from gross rent, expenses and vacancy.
Gross rental income minus operating expenses (taxes, insurance, maintenance, management). Excludes mortgage payments and income taxes.
Taxes, insurance, repairs, management and reserves. 30 to 50% of income is common.
%
The purchase price or current market value of the property.
Currency
Cap rateTypical cap rate
6.4%
Net operating income (annual)$48,000
Monthly NOI$4,000
NOI payback period15.6yrs
6.4% %
Low yield<4Typical4-8High8-10Very high / risky10+

This property has a 6.4% cap rate.

  • Cap rate is an unleveraged yield: it ignores your mortgage, so it compares properties on equal footing regardless of financing.
  • A lower cap rate usually signals a pricier, lower-risk market; a higher one signals more risk or upside. Always compare against similar local sales.
  • At this rate, the property pays back its 750,000 value in roughly 16 years from NOI alone, before any appreciation.

Next stepCompare this cap rate with recent comparable sales in the same submarket before drawing conclusions.

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