Cap Rate Calculator
Net operating income against property price.
Enter your values
ⓘ Live results
Results
- Cap rate
- 5.56%
- Net operating income
- $23,646.08
- Effective gross income
- $37,224.00
- Operating expenses
- $13,577.92
- Expense ratio
- 36.5%
- Value at your target cap rate
- $363,785.85
- Monthly NOI
- $1,970.51
Quick answer
Cap rate = net operating income ÷ property value. NOI excludes mortgage payments, so cap rate measures the property, not the financing.
Cap rate = NOI ÷ purchase price
How to use the Cap Rate Calculator
- 1Enter the purchase price and gross monthly rent.
- 2Add vacancy, tax, insurance, maintenance and management.
- 3Set a target cap rate to see the price that would deliver it.
Worked example
Using the values the calculator loads with:
Inputs
- Purchase price425000 $
- Gross monthly rent3300 $
- Vacancy allowance6 %
- Annual property tax5200 $
- Annual insurance1600 $
- Annual maintenance and capex3800 $
- Management fee8 % of rent
- Target cap rate6.5 %
Results
- Cap rate5.56%
- Net operating income$23,646.08
- Effective gross income$37,224.00
- Operating expenses$13,577.92
- Expense ratio36.5%
- Value at your target cap rate$363,785.85
- Monthly NOI$1,970.51
Frequently asked questions
What is a good cap rate?
It depends on the market: 4–5% in expensive metros, 6–8% in mid-size cities and 9%+ in higher-risk areas. Compare against similar local sales, not a national number.
Should the mortgage be in NOI?
No. Cap rate deliberately ignores financing so two buyers with different loans value the same building identically.
About this calculator
- Built and reviewed by James Whitfield · How we build and test calculators
- Report an error
Results are estimates for general information. For medical, legal, structural or financial decisions, confirm with a qualified professional.