Cap Rate Calculator
Calculate the capitalization rate (Cap Rate) for real estate investments: NOI / Property Value.
Cap Rate
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Net Operating Income
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Property Value
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Monthly NOI
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How Cap Rate Works
Cap Rate = Net Operating Income / Property Value x 100
The capitalization rate measures a property's potential return independent of how it is financed. It helps investors compare different properties on an equal basis.
Cap Rate Ranges
| Cap Rate | Typical Property Type |
|---|---|
| 3% - 5% | Class A properties in prime locations |
| 5% - 7% | Stable residential / commercial properties |
| 7% - 10% | Value-add or higher-risk properties |
| 10%+ | High-risk or distressed properties |
Frequently Asked Questions
What is a good cap rate?
A "good" cap rate depends on the market, property type, and your risk tolerance. Generally, 5-10% is considered reasonable for most investors. Higher cap rates offer more income but may come with more risk.
What is NOI?
Net Operating Income (NOI) is the total rental income minus operating expenses (property taxes, insurance, maintenance, management fees, vacancy loss). It does not include mortgage payments or depreciation.