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Cap Rate Calculator
Compute the capitalization rate on any rental from net operating income and price — and see what the property is worth at every cap rate from 5% to 10%.
Property
Income
Expenses
Cap rate6.6%Net operating income ÷ purchase price
NOI (annual)$23,200
NOI (monthly)$1,933
Effective gross income$34,200
How to use this calculator
Enter the purchase price, gross annual rent, an expected vacancy rate, and your annual operating expenses. The calculator returns net operating income and the cap rate instantly, then shows the implied value across a range of cap rates so you can benchmark the price.
What the metrics mean
- Cap rate — net operating income divided by purchase price, expressed as a percent.
- Net operating income (NOI) — effective gross income minus operating expenses, before the mortgage.
- Effective gross income — gross rent minus expected vacancy.
- Implied value — NOI divided by a target cap rate — what an investor would pay for that income.
Frequently asked questions
- How do you calculate cap rate?
- Cap rate = net operating income ÷ purchase price. NOI is your effective gross income (rent minus vacancy) minus operating expenses, before any mortgage payment.
- What is a good cap rate?
- It depends on the market and asset. Many investors target 5–10%; lower cap rates reflect pricier, lower-risk markets, while higher cap rates often signal more risk or work. Compare against similar nearby properties.
- Does cap rate include the mortgage?
- No. Cap rate is calculated before debt service, which makes it a clean way to compare properties regardless of how each one is financed.
- How does cap rate set value?
- Investors often value income property as NOI ÷ target cap rate. The calculator shows that implied value across a range of cap rates so you can sanity-check a price.
Comparing deals all day? dre1mery.com computes cap rate and full underwriting on every incoming lead automatically.