Home › Calculators › Cap Rate Calculator

Cap Rate Calculator

Work out a property's NOI and cap rate, or what it's worth at a market cap rate.

Updated November 4, 2026. Free, no sign-up; everything runs in your browser and nothing you type is stored.

Cap rate calculator

Property value or price ($)Gross yearly rent ($)Vacancy and credit loss (%)Yearly operating expenses ($)Market cap rate to value it at (%)

Cap rate

–

–Net operating income (NOI)

–Value at the market cap rate

–Expense ratio

The cap rate formula

The capitalization rate is a property's net operating income divided by its value: cap rate = NOI ÷ value. It's the yield you'd earn buying the property with all cash, which makes it a quick way to compare buildings regardless of financing. Turn it around and you get the direct capitalization method appraisers use: value = NOI ÷ cap rate.

NOI = gross rent − vacancy and credit loss − operating expenses (property tax, insurance, repairs, management, utilities, reserves).
NOI excludes mortgage principal and interest, income tax and depreciation.

Worked example

A building priced at $500,000 rents for $48,000 a year. With 5% vacancy and $16,000 of expenses, NOI is $29,600 and the cap rate is 5.92%. If similar buildings trade at a 6% cap rate, the market would value it at $493,333. A small change in cap rate moves value a lot: at 7%, the same NOI is worth $422,857.

Reading cap rates

Lower cap rates mean buyers pay more per dollar of income, usually for safer, newer or higher-demand property; higher cap rates mean more risk or less growth. Raising NOI (rents up, costs down) raises value at the same cap rate. For your return after a mortgage, use the cash on cash return calculator; for loan sizing, the DSCR loan calculator.

Common questions

How do you calculate cap rate?

Net operating income divided by the property's value or price.

Does cap rate include the mortgage?

No, it's measured before financing.

How do you value a property with a cap rate?

Divide NOI by the market cap rate.

Sources

IRS Publication 527: Residential rental property

More mortgage and home calculators: Assumable Mortgage Calculator · California Homestead Exemption Calculator · Closing Cost Calculator

More real estate, vehicle & dividend calculators: Florida Vehicle Registration Fee Calculator · QQQI Dividend Calculator · Bridge Loan Calculator · Hard Money Loan Calculator · Commercial Mortgage Calculator · Real Estate Commission Calculator

General information, not financial, tax or legal advice. Check important numbers with the official source before acting on them.