Cap Rate Calculator
Calculate capitalization rate, property value, or NOI for real estate investments. Compare investment opportunities and analyze rental property returns.
Total rent collected per year
Taxes, insurance, maintenance, etc.
Cap Rate
7.20%
ModerateNet Operating Income
$36,000
$3,000/month
Investment Breakdown
$3,000/month
Cap Rate
7.20%
Annual NOI
$36,000
Price/Income
13.9x
Cap Rate Interpretation:
- 3-5%: Prime locations, lower risk
- 5-7%: Average/stable markets
- 8%+: Higher risk/return potential
Balanced Investment
This cap rate suggests a balanced risk/return profile typical of stable rental markets.
Cap Rate by Property Type
Single Family
4-8%
Residential rentals
Multifamily
5-9%
Apartments, duplexes
Retail
5-10%
Shopping centers
Industrial
6-10%
Warehouse, logistics
Cap rates vary significantly by market conditions and location
Cap Rate Formulas
Cap Rate
NOI / Property Value × 100
Measures annual return rate based on net operating income.
Property Value
NOI / (Cap Rate / 100)
Estimate value based on income and target return rate.
Net Operating Income
Gross Rent - Operating Expenses
Income before debt service and income taxes.
Frequently Asked Questions
Official References
Learn more about real estate investment analysis:
- Understanding Capitalization Rate
Comprehensive guide to cap rate calculations
- IRS: Rental Income and Expenses
Tax implications for rental property owners
This calculator provides estimates. Actual returns depend on many factors including financing, taxes, appreciation, and property management.