Cap rate calculator
Find a property’s capitalization rate from its price, rent and operating expenses.
Cap Rate
Updates as you type
leaves the mortgage out on purpose
How this is calculated. In plain words.
- 1
Effective income is gross rent minus vacancy.
- 2
Net operating income (NOI) is effective income minus operating expenses. Mortgage payments are not included.
- 3
Cap rate is NOI divided by the property value.
This calculator gives an estimate for planning only. It is not financial, tax or legal advice.
Cap rate, in context.
Why are mortgage payments left out of cap rate?
Cap rate measures the property, not how you finance it. Two buyers with different loans should see the same cap rate for the same building, so debt service is left out of net operating income.
What is a good cap rate?
It depends on the market, property type and condition. Compare the result with recent sales of similar properties nearby rather than with a national number.
Should I use the asking price or my own estimate of value?
Use the asking price to judge a listing, and your own value estimate to check what you already own. Running both shows how far apart they are.
Is the result advice?
No. It is an estimate for planning, using only the numbers you type. Nothing is saved or sent anywhere; the calculation runs in your browser.
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