RentToolkit

Cap Rate Calculator

Capitalization rate from property value, gross income and operating expenses.

What do these mean?

Example: $30,000 income − $12,000 costs = $18,000 NOI. $18,000 ÷ $300,000 = 6% cap rate.

Your results, explained

Cap rate
NOI ÷ property value. A quick way to compare properties as if you paid all cash. Higher means more income for the price.
Net operating income
Net operating income (NOI): yearly income minus yearly operating costs, before any loan payment.

Estimates only. Not financial, tax or legal advice.

Results

Cap rate—
Net operating income—

Estimates for educational purposes only. Not legal, tax or financial advice. Results depend on your inputs and are provided as is. See our Terms.

How it works

Cap rate measures a property’s return as if you bought it with all cash. It lets you compare properties regardless of financing. Operating expenses exclude mortgage payments.

The formula

NOI = gross income − operating expenses
Cap rate = NOI ÷ property value × 100

FAQ

Does cap rate include the mortgage?

No. Cap rate is financing-neutral; use cash-on-cash return to include your loan.

What is a good cap rate?

It varies by market and property type. Lower cap rates usually mean lower risk and higher prices; higher cap rates mean more income per dollar but often more risk.

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