Our Cap Rate Calculator is a vital tool for real estate investors. It calculates the net operating income (NOI) and the resulting cap rate, allowing you to compare different properties and markets on an 'apples-to-apples' basis without considering financing.
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Cap Rate Calculator
Evaluate real estate investment profitability by calculating the Capitalization Rate (Cap Rate).
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Property Details
Annual Expenses
Financial Performance
Healthy ROI
Cap Rate
7.16%
Annual Return
Annual NOI
$35,780
Net Operating Income
Monthly NOI
$2,981.67
Cash Flow / Month
Income & Expense Breakdown
Effective Gross Income$51,300
Total Operating Expenses$15,520
Calculation Formula
NOI = (Gross Income - Vacancy) - Expenses
Cap Rate = (NOI / Property Value) × 100
* Note: Cap Rate doesn't account for mortgage payments or tax benefits. It's a "snapshot" of the property's potential return.
Investment Insights
A 7.16% Cap Rate indicates your expected unleveraged return. Typically, 4-10% is standard for residential rentals.
Higher is generally better, but carries more risk.
About Evaluate Rental Property Profitability
1
Property Value
Enter the current market value or purchase price of the property.
2
Gross Income
Input the total annual rent and other income generated.
3
Operating Expenses
List all annual costs including taxes, insurance, and maintenance.
Key Features
NOI Calculation
Easily determine Net Operating Income after all expenses and vacancy.
Market Comparison
Use Cap Rate to see if a property is priced fairly compared to local market standards.
Expense Tracking
Factor in taxes, insurance, maintenance, and management fees.
Frequently Asked Questions
Typically, 4% to 10% is considered good, but it depends heavily on the location, property type, and market risk.
No, Cap Rate ignores financing and mortgage costs to focus purely on the property's operational performance.
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