Cap Rate Calculator
Include: property tax, insurance, maintenance, property management, utilities, HOA fees
Cap Rate Benchmarks
10%+: Excellent return, but may indicate higher risk or area
7-10%: Good investment in most markets
5-7%: Fair, typical for stable/appreciating areas
<5%: Below average, may rely on appreciation
Formula: Cap Rate = (NOI / Property Value) × 100
About This Calculator
Cap Rate Calculator is designed to reduce manual errors and give repeatable outputs when you need quick, reliable answers.
Estimate capitalization rate from property income and value to benchmark real-estate deals across markets and asset types.
If your workflow expands, pair this calculator with Cash-on-Cash Return Calculator and Rental Property Cash Flow Calculator to cross-check assumptions and build a stronger analysis chain.
Formula
Cap Rate (%) = Net Operating Income / Property Value * 100
Example Calculation
The worked example below demonstrates how the input fields translate into the final output. Use it as a quick validation pass before entering your own numbers.
- annualNetOperatingIncome: 36000
- propertyValue: 520000
Explanation of Results
Result Interpretation
A 6.92% cap rate reflects annual unlevered yield relative to purchase price before financing effects.
FAQ
Should financing be included in cap rate?
No. Cap rate is an unlevered metric. Use cash-on-cash return when debt financing is part of the analysis.
Is a higher cap rate always better?
Not necessarily. Higher cap rates can indicate higher risk, lower growth expectations, or asset quality concerns.
Related Calculators
Continue exploring tools in this topic cluster to improve internal discoverability and reduce orphaned workflows.
See Also
Other calculators in Real Estate Investment
Cash-on-Cash Return Calculator
Mortgage Points Break-Even Calculator
1% Rule Calculator (Rental Property Screening)
Rental Property Cash Flow Calculator
1% Rule / 2% Rule Rental Screening Calculator
Fix & Flip Profit Calculator
Relevant Blog Posts
Articles in Real Estate Investment