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Tools / Real Estate / Cap Rate Calculator
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📁 Real Estate

Cap Rate Calculator

The cap rate is the most fundamental metric for rental property evaluation. It tells you the unleveraged return on a property based on net operating income. Higher cap rates mean better returns but potentially higher risk areas.

Cap Rate:

NOI:

Enter values and click Calculate to see chart

How to Use This Tool

  1. Enter the purchase price.
  2. Enter total annual rental income.
  3. Enter total annual expenses (taxes, insurance, maintenance, management).
  4. Click Calculate to see NOI, cap rate, and cash-on-cash return.

The Formula

Cap Rate = NOI / Purchase Price. NOI = Gross Income - Operating Expenses. Typically 4-12% for residential properties.

Why It Matters

You are considering a $500,000 duplex renting for $2,400/month. After $6,000/year in expenses, net operating income is $22,800. Your cap rate is 4.56% — compare to local cap rates (6-8% in many markets).

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