Cap Rate Calculator
Compute a property's capitalization rate from its net operating income and value, or solve for value or NOI. Operating expenses are separated from financing, so the result reflects the property's unleveraged return.
Written and reviewed by the CalcBundle editorial team. Transparent formulas · results are estimates, not advice.
Cap rate
Enter a property value greater than zero.
What is a cap rate calculator?
A cap rate calculator measures the return a property generates on its own, before any mortgage. It is the standard way investors compare income properties and estimate value from income.
How to calculate cap rate
- Effective gross income = gross rent × (1 − vacancy)
- NOI = effective gross income − operating expenses
- Cap rate = NOI ÷ property value × 100
- Value = NOI ÷ cap rate · NOI = value × cap rate
Cap rate vs cash-on-cash return
Cap rate ignores financing; cash-on-cash return reflects your mortgage and the cash you invested. Use cap rate to value and compare deals, and cash-on-cash to see the return on your actual money. For a full picture, run the rental property ROI calculator.
Frequently asked questions
What is a cap rate?
The capitalization rate is a property's net operating income (NOI) divided by its value or price, expressed as a percentage. It estimates the unleveraged annual return on the property itself, independent of how it is financed.
What is a good cap rate?
There is no universal number. Lower cap rates (4–6%) are common in prime, low-risk markets; higher cap rates (7–10%+) usually signal higher risk or lower growth. Compare within the same market and asset class.
Does cap rate include the mortgage?
No. NOI is calculated before financing, so cap rate excludes mortgage payments entirely. To reflect financing, use cash-on-cash return or rental property ROI instead.
How do I estimate property value from cap rate?
Switch to value mode and enter NOI and a market cap rate: value = NOI ÷ cap rate. A property with $70,000 NOI at a 7% cap rate is worth about $1,000,000.
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Disclaimer. This calculator provides estimates for informational purposes only. Results are based on the information you enter and the assumptions used by the calculator. Actual financial, tax, business valuation, lending, marketplace or investment outcomes may differ. Consider consulting a qualified professional for decisions involving significant amounts of money. Cap rate is an estimate based on your NOI and value inputs and excludes financing. Market cap rates vary by location and asset class.