Cap Rate Calculator
Calculate capitalization rate, or solve for value or required NOI
Frequently Asked Questions
Cap rate = Net Operating Income (NOI) ÷ Property Value × 100. NOI is gross rental income minus operating expenses (taxes, insurance, maintenance, management) — it excludes mortgage payments and income taxes, so cap rate is an unleveraged yield that lets you compare properties regardless of financing.
It depends heavily on the market and property type: 4-5% is common in premium, low-risk markets; 6-8% is typical for most rental properties; 9%+ often signals higher risk or a less desirable location. Always compare against recent comparable sales in the same submarket.
NOI = Gross Rental Income × (1 − vacancy rate) − Operating Expenses. This calculator can build NOI for you from gross rent, a vacancy/credit-loss percentage, and operating expenses (as a percentage of income or a fixed amount).
GRM = Property Value ÷ Gross Annual Rent. It's a quick secondary sanity check on price — lower GRM generally means a cheaper price relative to rental income, similar in spirit to a price-to-earnings ratio for stocks.