Enter Property Details
Cap Rate is calculated by dividing Net Operating Income by the Property Value.
How to use the calculator
Get your answer in 3 steps
Choose Your Mode
Pick what you want to find: Cap Rate, NOI, or Property Value.
Enter Numbers
Type the income (NOI), property price, or cap rate.
See Your Result
See the answer and a short explanation.
Result Interpretation
Is your Cap Rate good?
3% - 5% (Low)
Typical for Class A properties in prime locations. High price relative to income. Lower risk, lower yield.
5% - 8% (Typical)
Balanced range for many residential and commercial properties. Good mix of income and appreciation potential.
8% - 12%+ (High)
Higher yield but often higher risk. Common in older properties, rural areas, or buildings needing renovation.
How this calculator works
See the math (optional)
Cap rate is a simple way to compare a property’s income to its price. It shows what percent you earn each year before loan costs.
Where:
NOI (Net Operating Income)
Yearly rent minus running costs (taxes, insurance, repairs, management). Mortgage payments are not included.
Property Value
The current price or market value of the property.
Cap Rate
The yearly return % if you bought the property with cash.
View Calculation Example
Let’s say you are buying a duplex for $500,000.
Income & expenses
- Gross income: $60,000 / year
- Operating expenses: $20,000 / year (taxes, insurance, repairs)
NOI = $40,000 / year
Cap rate from NOI & value
Cap Rate
$40,000
$500,000
= 0.08 → 8.0%
This means if you bought the property for cash, your annual return would be 8% of the purchase price.
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Frequently Asked Questions
How do you calculate cap rate?
Cap Rate = Net Operating Income (NOI) / Property Value. It measures the annual return on investment relative to the property price, excluding mortgage costs.
What is a good cap rate?
A 'good' cap rate depends on the property type and location, but generally, 4-6% is common for stabilized assets in major markets, while 8-10% might be expected for riskier assets.
Does cap rate include mortgage?
No. Cap rate is calculated based on NOI, which excludes debt service (mortgage payments). It represents the return on the property itself, assuming an all-cash purchase.
How do you calculate NOI from cap rate?
NOI = Cap Rate (%) * Property Value. This helps you estimate how much income a property must generate to justify its price at a specific return target.