Real Estate
Cap Rate Calculator
Net operating income over value — the quick yardstick for a rental's return.
Free cap rate calculator. Enter annual rental income, operating expenses, and property value to get the capitalization rate and net operating income (NOI).
Cap rate = NOI ÷ value. Operating expenses exclude the mortgage — cap rate is an unlevered yield for comparing properties.
How it works
Enter income and expenses
Input the property's annual rental income and annual operating expenses (taxes, insurance, management, maintenance — not the mortgage).
Enter the value
Add the property value or purchase price.
Read the cap rate
The calculator returns the net operating income and the cap rate (NOI ÷ value).
Frequently asked
What is a cap rate?
The capitalization rate is a property's net operating income divided by its value, expressed as a percentage. It's a quick measure of unlevered return — what the property yields before financing — and a standard way to compare rentals.
How do you calculate cap rate?
Cap rate = NOI ÷ property value. NOI is annual rental income minus operating expenses (taxes, insurance, management, maintenance, vacancy) — but not the mortgage. A $30,000 NOI on a $400,000 property is a 7.5% cap rate.
What's a good cap rate?
It depends on the market and risk: many investors look for 5–10%, with higher cap rates in riskier or higher-yield markets and lower ones in stable, appreciating areas. A 'good' cap rate is relative to comparable properties, not an absolute number.
Should the mortgage be in the cap rate?
No. Cap rate is an unlevered metric — it excludes financing so you can compare properties independent of how each is funded. Mortgage payments belong in cash-flow and cash-on-cash calculations, not the cap rate.