Cap Rate Calculator

Our Cap Rate Calculator helps real estate investors quickly compute the capitalization rate of any income‑producing property. Understanding your cap rate allows you to compare investments, assess risk, and make informed buying decisions.

What Is a Cap Rate?

The capitalization rate (cap rate) is a metric that expresses a property’s expected annual return as a percentage of its value. It’s calculated by dividing the Net Operating Income (NOI) by the property’s current market value :contentReference[oaicite:17]{index=17}.

How to Use Our Cap Rate Calculator

1. Enter Net Operating Income (NOI): Annual rental income minus operating expenses (taxes, insurance, maintenance) :contentReference[oaicite:18]{index=18}.
2. Enter Property Value: Current market value or purchase price.
3. Adjust Vacancy Rate: Percentage of potential income lost to vacancies.
4. Adjust Operating Expense Rate: Percentage of gross income spent on expenses.
5. Click “Calculate” to view your Cap Rate.

Why Cap Rate Matters

• Compare Investments: Standardise returns across different properties :contentReference[oaicite:19]{index=19}.
• Assess Risk: Higher cap rates often signal higher risk, lower cap rates indicate stable markets :contentReference[oaicite:20]{index=20}.
• Valuation Tool: Estimate property value based on desired returns (Market Value = NOI ÷ Cap Rate) :contentReference[oaicite:21]{index=21}.

Frequently Asked Questions

What Is a Good Cap Rate?

Generally, cap rates between 5%–10% are considered healthy, but ideal rates vary by location and property type :contentReference[oaicite:22]{index=22}.

How Do I Calculate Net Operating Income?

NOI is calculated by subtracting operating expenses (property taxes, insurance, maintenance) from annual gross rental income :contentReference[oaicite:23]{index=23}.

Can I Use This Calculator for Commercial & Residential Properties?

Yes—simply enter the relevant income and expenses for any property type to obtain an accurate cap rate.