Cap Rate Calculator
Calculate the capitalization rate for an investment property. The cap rate is one of the most important metrics in real estate investing, measuring the expected rate of return based on the net operating income relative to the property value.
Cap Rate Calculator
FAQ
What is a good cap rate?
A good cap rate depends on the market and property type. Generally, 4-6% is considered low risk (prime locations), 6-8% is moderate, and 8-12%+ suggests higher risk or emerging markets. Compare cap rates within the same market for meaningful analysis.
What is Net Operating Income (NOI)?
NOI is the annual income generated by a property after deducting all operating expenses (property management, insurance, maintenance, taxes) but before mortgage payments and income taxes. It represents the property's earning potential regardless of financing.
Does cap rate account for financing?
No, cap rate does not factor in mortgage payments or financing costs. It measures the property's return as if purchased with all cash. For leveraged returns, use the cash-on-cash return calculator instead.