Cap Rate Calculator

Net operating income (NOI) divided by property price—before financing.

What is cap rate?

Short answer: Cap rate is the property’s net operating income (NOI) divided by its purchase price, expressed as a percentage—used to compare unlevered yields before financing.

Inputs

Cap rate = (NOI ÷ property price) × 100, where NOI = annual rental income − annual operating expenses (debt service excluded).

What is cap rate?

Cap rate is annual net operating income divided by property value, expressed as a percentage. It is an unlevered snapshot yield—before financing.

What is a good cap rate?

“Good” depends on market and risk: many markets quote roughly 4–10% for residential rentals; higher cap rates often imply higher perceived risk or lower growth.

Cap rate vs ROI?

Cap rate ignores leverage and hold period; ROI on cash invested includes financing, cash flow, and exit. See cap rate vs ROI.

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