Cap Rate Calculator
Compare rental properties on one number. Enter the price, rent and operating costs to get net operating income (NOI), the cap rate and the price that matches the cap rate you want.
How the cap rate calculator works
The capitalization rate, or cap rate, measures the return a property earns before financing: net operating income divided by price. It lets you compare properties without mixing in different loans.
Operating expenses include taxes, insurance, repairs, management and other costs, but never the mortgage payment. Be honest about repairs and vacancy, since a high cap rate that ignores them is not real.
After the cap rate, check the loan with our DSCR calculator and your cash return with the cash-on-cash calculator.
The formulas
Frequently asked questions
How do you calculate cap rate?
Divide net operating income by the purchase price. NOI is rent after vacancy minus operating expenses, excluding the mortgage.
What is a good cap rate?
It depends on the market and risk. Compare similar properties in the same area rather than relying on one number.
Does cap rate include the mortgage?
No. That is why it is useful for comparing properties.
What is value at target cap rate?
It is the price at which the property would earn your target cap rate: NOI divided by the target rate.
Track rental properties in Excel?
See the landlord rental property trackerAsk for a custom spreadsheetMore free tools: Cash-on-cash return calculator · DSCR calculator · All free calculators
Estimates only. Results depend on the numbers you enter and are not financial, tax or legal advice.