Rental property
Cap Rate Calculator
Calculate net operating income and capitalization rate before financing.
Calculate your result
What this calculator estimates
Calculate capitalization rate from NOI and value. It combines the inputs below to produce Capitalization rate. Every assumption remains editable so the estimate can reflect the property, financing and location being evaluated.
Worked example
Using the displayed sample assumptions, the calculator produces 6.32%. This is an illustration, not a market quote. Change one input at a time to understand what drives the result.
Inputs and assumptions
- Property value or purchase price — sample input: 500000 currency units
- Monthly gross rent — sample input: 4000 currency units
- Monthly other income — optional — sample input: 0 currency units
- Vacancy and credit loss — sample input: 5 %
- Annual operating expenses — sample input: 14000 currency units
How to interpret the result
Review cash flow together with reserves, vacancy and financing risk. Compare a conservative case with an expected case and keep a record of the assumptions used.
Common mistake to avoid
Do not treat gross rent as net operating income. Local definitions, taxes, lending practices and measurement requirements can materially change the result.
Frequently asked questions
What is a cap rate?
Capitalization rate is annual net operating income divided by property value or purchase price.
Does cap rate include mortgage payments?
No. Standard NOI and cap-rate calculations generally exclude financing payments.
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Reviewed 2026-09-08.