Cap Rate Calculator
Cap rate compares a property’s annualized net operating income to its price—useful when screening deals, not a substitute for full underwriting.
Cap rate
How this is calculated
Cap rate % = (NOI ÷ value) × 100, where NOI is annual net operating income before financing and income taxes.
Example: NOI $48,000 on a $600,000 asset → 8% cap rate.
Use this tool for
- Comparing two listings with different rents and prices.
- Sanity-checking broker marketing packages.
- Teaching NOI vs. cash-on-cash (which includes leverage).
Common questions
Is NOI before debt service?
Yes—cap rate uses unlevered NOI. Pair with cash-on-cash when you add a mortgage and actual cash invested.
Value = purchase or appraised?
Use the denominator that matches your decision—often agreed price for acquisition screening.
