Rental Cap Rate Calculator
Capitalization rate for a rental property.
Enter your values
taxes, insurance, maintenance, HOA
ⓘ Live results
Results
- Cap rate
- 5.6%
- Annual NOI
- $16,800.00
- Annual gross rent
- $24,000.00
- Annual expenses
- $7,200.00
Quick answer
Cap rate is annual net operating income divided by the property's purchase price, expressed as a percentage.
cap rate = NOI / purchase price x 100
How to use the Rental Cap Rate Calculator
- 1Enter the expected monthly rent and monthly operating expenses (not mortgage payments).
- 2Enter the property's purchase price.
- 3A cap rate of 4-10% is typical depending on market and risk; higher isn't always better.
Inputs explained
- Monthly operating expenses($)
- taxes, insurance, maintenance, HOA
Worked example
Using the values the calculator loads with:
Inputs
- Monthly rent income2000
- Monthly operating expenses600 $
- Purchase price300000
Results
- Cap rate5.6%
- Annual NOI$16,800.00
- Annual gross rent$24,000.00
- Annual expenses$7,200.00
Frequently asked questions
Does cap rate include the mortgage?
No, cap rate is calculated before financing costs — it measures the property's own return independent of debt.
What's a good cap rate?
It varies by market, but 5-8% is commonly considered a solid range for residential rentals.
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.