Cap Rate Calculator

Cap rate calculator

Enter a property's price, rent and expenses to see its cap rate and net operating income. Results update as you type.

Showing an example: a South Orange County duplex. Replace it with your own numbers.

1Property

Purchase price or current value

2Income

Rental income / month

Total rent across all units

Other income / month

Parking, storage, laundry

Vacancy and credit loss

5% is a common estimate

3Operating expenses

Property taxes / year

Insurance / year

Property management

Percent of collected rent

Maintenance and repairs / year

Utilities / month

Only what the owner pays

HOA (homeowners association) dues / month

Other expenses / year

Landscaping, pest control, reserves

Total operating expenses / year

Leave out mortgage payments, depreciation and capital improvements

4Cost of money (optional)

Your cost of money

Your loan rate, or the return you could earn elsewhere

Cap rate

–%

Enter a purchase price and rent to see the cap rate.

Gross scheduled income: –
Vacancy and credit loss: –
Operating expenses: –
Net operating income: –

Cap rate compared with your cost of money

Cap rate–

Cost of money–

Spread–

What price would hit my target cap rate?

Price at this cap rate–

Discuss these numbers with an agent Email this analysis

How cap rate works

Cap rate = net operating income ÷ property value

Net operating income (NOI) is what the property earns in a year after vacancy and operating expenses, but before mortgage payments and income taxes. Cap rate is the return you would earn if you bought it with cash.

A lower cap rate means a higher price for each dollar of income. That's common in high demand coastal markets, where buyers also count on appreciation. A higher cap rate means more income per dollar invested, and sometimes more risk.

Compare the cap rate with your cost of money. If it's higher, borrowing increases your return (positive leverage). If it's lower, borrowing reduces it.

For educational purposes only. These are estimates, not financial, tax or investment advice. Confirm all figures with your agent, lender and tax professional.