Cap Rate Calculator
Calculate the capitalization rate of an investment property — net operating income as a percentage of property value.
Cap rate
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NOI as monthly figure —
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How it works
Cap rate = Net Operating Income ÷ property value × 100Frequently Asked Questions
How do I calculate cap rate?
Divide Net Operating Income (rental income minus operating expenses, before mortgage payments) by the property's current value or purchase price: $28,000 NOI on a $400,000 property is a 7% cap rate.
What is Net Operating Income (NOI)?
Total rental income minus operating expenses — property taxes, insurance, maintenance, management fees, and vacancy allowance — but excluding mortgage payments and depreciation, which are financing and accounting items, not operating costs.
What is a good cap rate?
It depends on market and risk: 4–6% is common in stable, low-risk major-city markets; 8–12%+ often reflects higher-risk properties or markets. Lower cap rates generally mean the market is paying more for the same income, often reflecting expected appreciation.