Real Estate
Cap Rate Calculator
Estimate capitalization rate from scheduled rent, vacancy, other income, operating expenses, and property value. Review NOI composition, value-at-cap-rate scenarios, sensitivity analysis, and export a professional PDF property report.
Scheduled rental income-
Effective gross income-
Net operating income-
Capitalization rate-
Average monthly NOI-
Income valuation
Implied property value at target cap rates
Value sensitivity to cap rateUses the calculated net operating income
| Target cap rate | Implied value | Value difference | NOI multiple | Monthly NOI |
|---|
Income bridge
Scheduled rent to NOI and cap-rate value
Vacancy, other income, expenses, NOI, and property value stay in one income-yield bridge.
Scheduled rent to NOI and cap-rate value
Scheduled rent$0
- vacancyEffective income$0
- expensesNOI$0
Property value$00%
Average monthly NOI$0
Income yield basisNOI / value
How to use Cap Rate Calculator
- Enter property value, monthly rent, vacancy allowance, other annual income, and annual operating expenses.
- Read scheduled income and effective gross income separately so vacancy loss is visible.
- Check NOI before reading the cap rate; cap rate only makes sense when NOI is clean and consistently defined.
- Use the valuation scenarios to see what the same NOI implies at different target cap rates.
- Use the visual bridge to confirm which part of income is lost to vacancy and expenses.
Calculator guide
Understanding Cap Rate Calculator
A cap rate is an income-yield snapshot: annual net operating income divided by property value. The useful part is not just the final percentage, but the bridge from scheduled rent through vacancy, other income, operating expenses, and NOI.
Calculation method
How the calculation works
Capitalization rate = annual net operating income / property value x 100. Monthly rent is annualized, reduced by the vacancy percentage, increased by other income, and reduced by operating expenses to produce NOI. Cap rate equals NOI divided by property value.
Worked situations
Practical examples
- Use Cap Rate Calculator for a quick everyday estimate.
- Change any input to compare another scenario.
Better inputs
Useful tips
- Use stabilized income and expenses when comparing properties.
- Keep debt service, depreciation, and income tax out of NOI.
- Compare cap rates only among properties with similar risk, quality, lease terms, and market assumptions.
Before relying on the result
Limitations and common mistakes
- The estimate does not value future rent growth, capital expenditures, financing, taxes, or sale proceeds.
- A single cap rate can hide lease risk, tenant quality, maintenance backlog, and market liquidity.
- The result is not an appraisal or investment recommendation.
Reference
Key terms
- NOI
- Net operating income before debt service, depreciation, and income tax.
- Vacancy loss
- Income removed to reflect expected noncollection or downtime.
- Cap rate
- NOI as a percentage of property value.
- Implied value
- NOI divided by a selected market cap rate.
Important note
Calculated from the entered property and financing assumptions. It does not replace lender, appraisal, legal, tax, or investment review.
Frequently asked questions
Should mortgage payments be included in NOI?
No. NOI is measured before debt service so properties can be compared independent of financing.
Why does value fall when the target cap rate rises?
For the same NOI, a higher required yield means a lower implied price.
Is a higher cap rate always better?
Not necessarily. It may indicate higher risk, weaker location, older property, or less certain income.
Does this replace an appraisal?
No. It is a transparent income model, not a certified valuation.