Cap Rate Calculator

This cap rate calculator takes a purchase price, gross annual rent, a vacancy allowance and your operating expenses, entered as annual dollars or as an expense ratio, and returns three numbers: the capitalization rate, the net operating income behind it, and the monthly cash flow before any debt payments. Unlike the lookup tools on this site, nothing here touches a network. Every figure you type stays in your browser and the math runs locally.

One promise up front: I will not tell you what a good cap rate is, because there is no universal answer, and any calculator that hands you one is glossing over how much the market and the property class matter. What I will do is give you clean numbers and enough context to judge them against your own market.

How to use

1. Enter the purchase price, or the current market value if you already own the property.
2. Enter the gross annual rent the property brings in at full occupancy.
3. Set a vacancy percentage to account for the empty weeks between tenants.
4. Enter operating expenses as an annual dollar figure, or switch to expense ratio mode and use a percentage of rent instead.
5. Read the results: cap rate, net operating income, and monthly cash flow before debt.
6. Nudge each assumption and watch how sensitive the cap rate is to it. That sensitivity is half the lesson.

Why use our cap rate calculator?

Showing the NOI, not just the final percentage, is deliberate. Net operating income is where input mistakes hide, and when you can see the intermediate number it takes two seconds to notice that you typed monthly rent into an annual field. A cap rate is only as honest as the NOI underneath it.

Excluding the mortgage is not an oversight, it is the entire point of a cap rate. By ignoring financing, the metric describes the property itself, so a cash buyer and a leveraged buyer can compare the same building on equal terms. When you want the after-debt picture, our mortgage payment calculator supplies the payment to subtract.

About that universal good number: it does not exist. A cap rate that would be considered weak in a prime coastal market can be a genuine bargain in a smaller city, and a stabilized building in a strong neighborhood trades at a very different rate from a tired one across town. Cap rates also move with interest rates over time. Compare a deal against similar properties, in the same market, in the same class, or the comparison means nothing.

The vacancy field is there because the glossiest listings forget it. I have read seller pro formas that assumed every unit stays full every day forever, and the difference between zero vacancy and a realistic allowance is often the difference between a deal that pencils and one that only pretends to.

Finally, privacy: you are analyzing a purchase you may not have told anyone about. Nothing you enter is stored, transmitted or seen by me. Close the tab and it never existed.

Who is this tool for?

Screening listings is the daily use. Price and rent come straight from the listing, add sane assumptions for vacancy and expenses, and thirty seconds later you know whether the property deserves a deeper look or a polite scroll past. Volume matters when you are hunting, and this makes volume cheap.

Comparing two properties in the same market is where cap rate earns its reputation. Same city, same class, two candidates: the cap rate strips out financing noise and tells you which building works harder per dollar of price. Pair it with our rental yield calculator if you also want the gross yield view.

Auditing a seller's pro forma is the defensive use. Rebuild their numbers here with your own vacancy and expense assumptions, and watch how far the advertised cap rate falls. If their version assumed no vacancy and suspiciously thin expenses, that is worth knowing before you offer.

And once a property passes the cap rate screen, the natural next step is our cash on cash return calculator, which brings your actual financing into the picture and measures the return on the cash you personally put in.

Frequently asked questions