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Real Estate & Housing

How to Calculate Real Estate Cap Rate

Instant affordability check

Cap rate expresses a property’s unlevered yield as NOI divided by value. Investors use it to compare deals across markets without factoring financing.

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1000500000
500005000000

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Tailored to your live inputs and result—guidance only, not professional advice.

  • Stress test

    Model a higher rate and vacancy

    Re-run with +1% rates and a vacancy bump to see if cash flow still holds under stress.

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Pro strategic insights

→ Invest leftover cash (compound interest)→ Refine monthly mortgage / PITI→ Compare fee drag vs housing costs

Plain-English guide

Terms & how it works

Confused by a field? Read the short definitions here while you use the tool.

  • Annual Net Operating Income

    The “Annual Net Operating Income ($)” value used in this tool’s formula. Adjust it to see results update live.

  • Property Value

    The “Property Value ($)” value used in this tool’s formula. Adjust it to see results update live.

  • NOI

    Net operating income

    Income after operating expenses.

When to use this Real Estate Cap Rate

Common use cases

  • Stress-test monthly payments at different down payments
  • Compare renting versus buying over a multi-year hold
  • Model rental cash flow before making an offer

Localized examples

  • US metro mortgage payment examples
  • Canadian property tax and closing-cost planning

What you get

  • Update price, rate, and taxes for instant projections
  • Side-by-side scenarios for common buyer decisions
  • Free online tool with no sign-up wall

How to Calculate Real Estate Cap Rate Step-by-Step

  1. 1Enter the property’s annual net operating income.
  2. 2Input the purchase price or current market value.
  3. 3Review the resulting capitalization rate percentage.

Governing formula

Cap rate = NOI / PropertyValue

Unlevered yield on an income property using net operating income.

Example: set Annual Net Operating Income ($) = 28,000, Property Value ($) = 400,000, then read the result.

Variable definitions

  • NOI

    Net operating income

    Income after operating expenses.

  • Value

    Property value

    Price or market value.

  • Ignores financing—use cash-on-cash for levered views.

Frequently Asked Questions

It depends on market risk, property type, and growth expectations—higher caps often imply higher perceived risk.

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4.8

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Aisha K.

Mar 12, 2026

Clean layout and the results update instantly. Exactly what I needed for a quick planning check.

Daniel R.

Feb 28, 2026

Very usable on mobile. Would love a save/export option later, but the math feels solid.

Priya S.

Feb 3, 2026

The FAQ section answered my questions before I even had to search. Smooth dark mode too.

Marcus L.

Jan 19, 2026

Simple inputs, clear outputs. This replaced three bookmarks I used to juggle.

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