Cap Rate Calculator
Compute cap rate from NOI and purchase price. Free, fast, and private.
How it works
Cap rate = (NOI ÷ Purchase Price) × 100. Use it to compare properties before financing.
Example
$24,000 ÷ $300,000 × 100 = 8%.
FAQ
What is a good cap rate?
Depends on market and risk. Compare within your submarket. Generally, 4-6% for A-class properties, 6-8% for B-class, and 8%+ for C-class properties.
Does cap rate include financing?
No, it uses NOI and purchase price only. Cap rate is calculated before considering any financing or mortgage payments.
What is NOI in cap rate calculation?
Net Operating Income (NOI) is annual rental income minus operating expenses like taxes, insurance, maintenance, and management fees, but before mortgage payments.
How is cap rate different from cash-on-cash return?
Cap rate uses the full purchase price regardless of financing, while cash-on-cash return considers your actual cash invested and financing structure.
Can cap rates be negative?
Yes, if NOI is negative (operating expenses exceed rental income), the cap rate will be negative, indicating a property that loses money operationally.