Cap Rate Calculator

A Cap Rate Calculator helps you estimate the return on a real estate investment based on the property’s net operating income (NOI) and its current market value. This tool allows investors to quickly calculate cap rate percentages to assess whether a property aligns with their financial goals. This real estate cap rate calculator saves time and offers clarity, especially when comparing multiple investment opportunities side by side.

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Property Price ($)

Gross Annual Income ($)

Operating Expenses ($)

Cap Rate Comparison Table

#	Property Price ($)	Gross Income ($)	Expenses ($)	NOI ($)	Cap Rate (%)

How to Use the Cap Rate Calculator?

Using the cap calculator is straightforward and only requires a few key details. You’ll need the property’s net operating income and its current market value or purchase price. Once you enter these figures into the calculator, it instantly gives you the cap rate, allowing you to compare properties or validate a potential deal.

To calculate cap rate accurately, follow these steps:

This NOI cap rate calculator simplifies investment evaluation for buyers, brokers, and real estate analysts.

What Is Cap Rate?

Cap rate, short for capitalization rate, is a metric used to measure the expected return on a real estate investment. It represents the ratio between the net operating income of a property and its market value. The real estate cap rate helps investors understand how much income a property is generating relative to its price, offering a quick snapshot of its profitability and risk. Cap rate is commonly used in commercial, multifamily, and rental property evaluations.

What’s a Good Cap Rate?

A “good” cap rate varies depending on the location, property type, and market conditions. Generally, cap rates between 4% to 10% are considered standard across different segments. Lower cap rates usually indicate lower risk and stable markets, while higher cap rates often come with more uncertainty but greater potential returns.

Investors often use the cap calculator to benchmark deals and ensure the numbers meet their personal risk tolerance and income expectations.

Cap Rate Formula: How to Calculate?

To calculate cap rate, you divide a property’s annual net operating income by its current market value or purchase price. The resulting percentage reflects the property’s return on investment before financing costs and taxes.

Here’s the cap rate formula:

Cap Rate = (Net Operating Income ÷ Property Value) × 100

Use the formula by following these steps:

Determine the NOI – subtract operating expenses from gross income.
Find the market value or price of the property.
Divide NOI by the value.
Multiply by 100 to get the percentage.

This simple formula powers every cap rate calculator and remains a cornerstone of real estate investment analysis.

Cap Rate vs Other Metrics

This calculator takes the guesswork out of evaluating potential investments. Instead of crunching numbers manually, the tool does it instantly, reducing errors and saving valuable time.

Key benefits include:

The NOI cap rate calculator is essential for any investor focused on reliable income generation.

CRC Loan EMI Calculator FAQs

Can cap rate be negative?

Yes, a negative cap rate indicates the property has a negative net operating income, which is often a red flag for investors.
What is a good cap rate for multifamily?

A good cap rate for multifamily properties typically ranges from 5% to 8%, depending on the market.
Is cap rate the same as ROI?

No, cap rate looks at income versus value, while ROI considers the total return, including financing and equity gains.
Why is a high cap rate bad?

A good cash-on-cash return usually falls between 8% and 12%, depending on the investor’s risk tolerance and goals.