Cap Rate Calculator

What is Cap Rate? Capitalization rate (cap rate) is a metric used to evaluate the profitability and return potential of a real estate investment. It represents the ratio of a property's net operating income to its current market value.

Formula: Cap Rate = (Net Operating Income / Property Value) × 100

Net Operating Income (NOI): Calculate your annual rental income and subtract all operating expenses (property management, maintenance, insurance, taxes, utilities). Do NOT include mortgage payments in this calculation.

Property Value: Use the current market value or your purchase price. For existing properties, consider getting a professional appraisal.

Example: A property with $60,000 annual NOI and a value of $800,000 has a cap rate of 7.5% ($60,000 / $800,000 × 100).