What this Cap Rate Calculator does
The capitalization rate formula is straightforward: NOI ÷ property value. What trips up most investors is getting to a reliable NOI in the first place. This English-language cap rate calculator solves both problems. Enter your gross monthly rent, vacancy rate, and monthly operating expenses, and the built-in NOI builder derives your annual net operating income automatically — then divides it by the property value to give you the cap rate. Flip the mode to solve for NOI or backing into a maximum offer price from a target cap rate. Most online cap-rate calculators require you to compute NOI elsewhere; this one keeps everything in one place. Results are color-coded against U.S. residential yield bands so you can see at a glance whether you're looking at a coastal Class A deal or a value-add play. 100% client-side — your data never leaves your browser. No uploads, no tracking, no server logs.
Features
- Three calculation modes. Solve for cap rate (from NOI + value), annual NOI (from cap rate + value), or property value (from cap rate + NOI). Switch modes without clearing your inputs.
- Built-in NOI builder. Enter gross monthly rent, a vacancy percentage, and monthly operating expenses. The tool derives annual NOI so you don't need a separate spreadsheet step before running the capitalization rate formula.
- Yield band classification. Results are automatically labeled as Premium (below 4%), Normal (4–8%), or High-yield / higher-risk (above 8%) based on U.S. residential benchmarks, giving immediate context to the raw number.
- Reverse modes for offer pricing. If you know the market cap rate and your NOI projection, the Value mode backs into a maximum offer price — useful when determining cap rate thresholds for a given deal before you bid.
- No server, no account. Every calculation runs in your browser. Nothing is sent to a server, stored, or logged. Useful for analyzing sensitive deal data without leaving a trail.
- Cross-check with other return metrics. Cap rate is the unlevered yield. To layer in financing, pair the result with the [loan calculator](/en/loan-calculator/) to model debt service and then compute cash-on-cash return, or use the [Investment ROI Calculator](/en/investment-roi-calculator/) for a total-return view.
How to use the Cap Rate Calculator
Pick a mode, fill in the two known inputs, and read the result. Use the NOI builder if you're starting from raw rent figures rather than a pre-computed NOI.
- Choose your mode. Select 'Cap rate from NOI + value' to figure out cap rate, 'NOI from cap rate + value' to find annual income needed, or 'Value from cap rate + NOI' to price a property.
- Build your NOI (optional). Toggle 'Build NOI from rent, vacancy, and expenses.' Enter gross monthly rent (e.g., $3,200), vacancy percentage (5% is a common U.S. residential assumption), and monthly operating expenses such as property taxes, insurance, and management fees. The tool outputs annual NOI automatically.
- Enter property value or cap rate. Fill in the remaining input — purchase price in dollars or a target cap rate in percent. For example, a San Francisco duplex at $1,200,000 with $48,000 NOI yields a 4% cap rate.
- Read the result and yield band. The result appears with a yield-band label. Below 4% signals an appreciation-driven market; above 8% flags higher risk. Use the interpretation panel to understand what the number means for your market segment.
- Iterate on assumptions. Adjust vacancy from 5% to 8% or swap a management fee in and out to see how sensitive the cap rate is to each input. This kind of sensitivity check is standard underwriting practice before computing cap rate for a final offer.
Common use cases
- Comparing two rental properties. Enter each property's rent, vacancy, and expenses side-by-side to calculate cap rate for both. A higher cap rate isn't automatically better — compare the yield band, property class, and market trajectory together.
- Backing into a maximum offer price. You know the local market cap rate is 6% and your NOI projection is $36,000. Switch to Value mode: $36,000 ÷ 6% = $600,000 maximum price. This discipline keeps you from overpaying in competitive markets.
- Stress-testing NOI assumptions. Sellers often quote pro-forma cap rates based on projected rents after improvements. Use the NOI builder with trailing actuals — not the seller's projections — to compute a conservative trailing cap rate before negotiating.
- Portfolio blended cap rate tracking. Run each property individually, note the NOI and value, then sum them to calculate your portfolio's blended capitalization rate over time. Useful for reporting to partners or tracking performance across a holding period.
- First-time investor education. Understanding why a 4% cap rate in a growing coastal metro can outperform an 8% cap rate in a stagnant market is non-obvious. The yield-band panel explains the risk premium embedded in higher cap rates without requiring a finance background.
Frequently asked questions
What is the cap rate formula?
Cap rate = Net Operating Income ÷ Property Value, expressed as a percentage. For example, a property generating $30,000 NOI and worth $500,000 has a 6% cap rate. NOI is gross rental income minus vacancy loss minus operating expenses — it explicitly excludes mortgage payments.
Is my data saved or sent anywhere?
No. This tool runs entirely in your browser. No calculation, address, or dollar figure is transmitted to any server. There is no account, no login, and no analytics that capture your inputs. You can use it on sensitive deal data with confidence.
What's the difference between cap rate and cash-on-cash return?
Cap rate is the unlevered yield — what you'd earn if you paid all cash. Cash-on-cash return accounts for your actual mortgage. If your cap rate is 6% but your mortgage rate is 7%, you have negative leverage: borrowing money hurts your return. Always model both when financing a purchase.
What counts as an operating expense for cap rate purposes?
Property taxes, insurance, property management fees (typically 8–10% of gross rent, even if you self-manage — your time has a cost), maintenance and repairs, landscaping, and any utilities the owner pays. Mortgage principal and interest, depreciation, and income taxes are excluded from NOI by convention.
Why do cap rates vary so much between cities?
Cap rate reflects risk and growth expectations. A San Francisco property might trade at a 3.5% cap rate because buyers are paying for expected appreciation. A property in a smaller Midwestern market might clear at 8–9% because buyers demand a higher yield to compensate for lower liquidity and slower rent growth. Neither is inherently right — they reflect different risk profiles.
How do I determine cap rate when I only know the rent?
Use the NOI builder: enter your gross monthly rent, apply a vacancy factor (5% is the U.S. residential rule of thumb, though some markets run 8–12%), and subtract estimated monthly operating expenses. The result is your annual NOI, which you then divide by the purchase price to find the cap rate. For compound growth across a holding period, the [CAGR Calculator](/en/cagr-calculator/) can model rent escalation over time.