Cap Rate Calculator
Use this free cap rate calculator to measure a rental property's return independent of financing. Enter the price, rent and operating costs, and get the capitalization rate and net operating income instantly.
The cap rate is how investors compare properties on a like-for-like basis, no matter how each deal is financed. See exactly how the income breaks down and how the rate shifts with the price you pay. No account, no sign-up, no spreadsheet.
▶ Income & operating costs
| Purchase price | Cap rate | NOI |
|---|
Estimates are for illustration and education only — not investment advice. Actual NOI depends on real rents, costs, taxes and occupancy.
How the cap rate works
The capitalization rate is the property's net operating income as a percentage of its price. Because it ignores your mortgage entirely, it isolates how the asset itself performs — letting you compare deals no matter how each is financed.
Cap rates across market types
Three properties at different price points. Load any one into the calculator and adjust from there.
How to use the cap rate calculator
Four short steps. Change any field and the cap rate, NOI and breakdown update instantly.
Enter price and rent
The purchase price and the rent it earns — toggle between monthly and annual for the rent.
Set vacancy
Allow for the portion of the year the unit sits empty; this reduces the income the cap rate is based on.
Add operating costs
Tax, insurance, maintenance, management and any other costs — but not the mortgage. Cap rate is unlevered.
Compare on price
The table shows how the same income produces different cap rates depending on what you pay — your negotiating lever.
What the cap rate tells you
The cap rate is the standard yardstick for income property. It answers a single question: if you paid all cash, what annual return would the property's operations produce? Because it strips out financing, it lets you line up deals of different sizes and leverage on equal footing.
Why financing is excluded
Two investors can buy the same building with wildly different loans, so including the mortgage would make the "return" say more about the borrower than the asset. The cap rate deliberately ignores debt, isolating the property's own earning power. To layer financing back in, use the cash-on-cash return calculator.
What's a good cap rate?
It depends on the market and risk. Higher cap rates (8%+) usually mean more income but more risk or work — older properties, weaker locations. Lower cap rates (3–5%) are typical of prime, stable markets where buyers accept less income in exchange for safety and appreciation. There's no universally "good" number; compare within a market.
Cap rate and value move inversely
For a given NOI, paying more lowers the cap rate and paying less raises it. That's why the cap rate is also a pricing tool: divide a property's NOI by the local market cap rate to estimate what it's worth.
Who it's for
Real-estate investors screening and pricing income properties. You only need the price, rent and operating costs to start.
Want the financed return and cash flow too? Try the cash-on-cash return calculator or the rental property ROI calculator, or browse all our free tools.