Cap Rate Calculator

Calculate the cap rate for any investment property using net operating income and property value. Compare multiple properties side by side, view benchmarks by property type, and evaluate investment returns.

Property A

Property Name

Purchase Price ($)

Gross Annual Rental Income ($)

Annual Property Taxes ($)

Annual Insurance ($)

Annual Maintenance ($)

Property Management (%)

Vacancy Rate (%)

Cap Rate — Property A

5.75%

Average

NOI (Annual)

$14,376

NOI (Monthly)

$1,198.00

Expense Ratio

40.10%

Gross Rent Multiplier

10.42x

Cap Rate = $14,376 / $250,000 = 5.75%

Income Breakdown

NOI

$14,376

Net Operating Income$14,376

Property Taxes$3,000

Insurance$1,200

Maintenance$2,400

Management Fee$1,824

Vacancy Loss$1,200

NOI Waterfall

Gross Rental Income$24,000

Less: Vacancy (5%)−$1,200

Effective Gross Income$22,800

Less: Property Taxes−$3,000

Less: Insurance−$1,200

Less: Maintenance−$2,400

Less: Management (8%)−$1,824

Total Operating Expenses−$8,424

Net Operating Income (NOI)$14,376

Cap Rate Benchmarks by Property Type

Property Type	Low	Typical	High
Single-Family Residential	4%	6%	8%
Multi-Family Residential	5%	7%	9%
Retail / Commercial	5%	7.5%	10%
Office Space	5.5%	7.5%	10%
Industrial / Warehouse	6%	8.5%	12%
Mixed-Use	5%	7%	9.5%

The thin vertical line on each bar represents your cap rate of 5.75%. Market cap rates vary by location, property condition, and economic conditions.

Price vs. Cap Rate Sensitivity

Purchase Price	Cap Rate	Monthly NOI	GRM
$200,000(-20%)	7.19%	$1,198.00	8.33x
$225,000(-10%)	6.39%	$1,198.00	9.38x
$237,500(-5%)	6.05%	$1,198.00	9.90x
$250,000Current	5.75%	$1,198.00	10.42x
$262,500(+5%)	5.48%	$1,198.00	10.94x
$275,000(+10%)	5.23%	$1,198.00	11.46x
$300,000(+20%)	4.79%	$1,198.00	12.50x

Shows how cap rate changes at different purchase prices while NOI remains constant at $14,376 per year.

How Cap Rate is Calculated

Capitalization Rate Formula

Cap Rate = Net Operating Income (NOI) / Property Purchase Price x 100%

Net Operating Income (NOI)

NOI = Gross Rent - Vacancy Loss - Taxes - Insurance - Maintenance - Management

NOI excludes mortgage payments, depreciation, and capital expenditures. It represents income from operations only.

Gross Rent Multiplier (GRM)

GRM = Property Price / Annual Gross Rental Income

A lower GRM indicates a potentially better investment. Typical GRM ranges from 4x to 12x depending on the market and property type.

Disclaimer: This calculator provides estimates for informational purposes only. Cap rates vary significantly by location, property condition, market conditions, and individual property characteristics. Actual returns may differ from estimates. This tool does not account for financing costs, capital expenditures, depreciation, or tax benefits. Consult with a qualified real estate professional or financial advisor before making investment decisions.

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How to Use Cap Rate Calculator

1Enter the property purchase price or current value.
2Input gross rental income and operating expenses.
3View the calculated cap rate and NOI.
4Compare with benchmarks for your property type.

Frequently Asked Questions

What is a cap rate?▾

Capitalization rate (cap rate) is the ratio of net operating income (NOI) to property value, expressed as a percentage. It measures the expected rate of return on a real estate investment, independent of financing.

What is a good cap rate?▾

Good cap rates vary by property type and location. Residential properties typically range 4-8%, commercial 5-10%, and industrial 6-12%. Higher cap rates indicate higher potential returns but also higher risk.

How is net operating income calculated?▾

NOI = Gross Rental Income minus Operating Expenses (property taxes, insurance, maintenance, management fees, vacancy allowance). It does not include mortgage payments or depreciation.

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About Cap Rate Calculator

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