Calculate cap rate for real estate investments and properties
Enter the annual Net Operating Income (NOI) and the property purchase price. The calculator divides NOI by the purchase price and multiplies by 100 to get the capitalization rate as a percentage.
If your property generates $50,000 in annual NOI and costs $625,000, the cap rate is 8% ($50,000 ÷ $625,000 × 100).
It varies by market and property type. Generally, 4-6% in prime locations, 6-8% in secondary markets, and 8-12%+ in tertiary markets or higher-risk properties.
No, cap rate is calculated before debt service. It measures property performance independent of financing, making properties comparable.
Cap rate and value are inversely related. If cap rates rise (compression), values fall. If cap rates fall (expansion), values rise for the same NOI.