Cap rate calculator

Cap rate is a property's net operating income divided by its price. A home bought for $250,000 that produces $14,800 of NOI has a 5.92% cap rate. It ignores financing, so it compares properties on their income alone.

  • Free, no signup
  • Official county data
  • Formulas published

Rental assumptions

Model rent, financing, and operating costs. Results update as you edit.

Property

Purchase & income

Price, rent, and capital required at closing.

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Operating costs

Vacancy, reserves, and ownership expenses.

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Calculated results

Rental performance

Cash flow and return metrics from your assumptions.

Enter purchase price and monthly rent to see cash flow and DSCR.

Enter assumptions

Complete the required inputs to save.

What does the cap rate calculator do?

This calculator finds NOI from your rent, vacancy and operating costs, then divides it by the purchase price. It also shows cash flow, cash-on-cash and DSCR, so you can see how the same deal looks once a loan is added.

Who should use it?

Rental investors comparing properties, or checking an asking price against income.

What you need to enter

  • Purchase price
  • Monthly rent
  • Vacancy rate
  • Property tax, insurance, maintenance and management
  • Loan terms, for the metrics beside cap rate

How the calculation works

  1. 1Annual rent less vacancy gives effective income.
  2. 2Effective income less operating costs gives NOI. Loan payments are not an operating cost.
  3. 3NOI ÷ purchase price gives cap rate.

The same formulas run the full workspace and are listed on the formulas page.

Worked example

A $250,000 single-family rental

Rent
$2,000 a month
Vacancy
5% ($1,200 a year)
Operating costs
$8,000 a year
NOI
$14,800
Cap rate
5.92%

$24,000 rent − $1,200 vacancy − $8,000 costs = $14,800. $14,800 ÷ $250,000 = 5.92%.

How to read the results

  • Compare a cap rate only against similar properties in the same market. There is no universal good number.
  • A cap rate below your loan rate usually means the loan will reduce your return, not add to it.

Common mistakes and limits

  • Using the seller's current tax bill when a sale will trigger a reassessment.
  • Leaving out vacancy, maintenance or management.
  • Including mortgage payments in operating costs.

Questions people ask

Divide annual net operating income by the purchase price. NOI is rent minus vacancy and operating costs, before any loan payment.

FlipMetric

Ready to run your own numbers?

Use the calculator above, or open the full workspace. Your first analysis doesn't need an account.

Open the workspaceSee pricing

Estimates only, not financial, legal or tax advice. Read the disclaimer.