Cap Rate Calculator
Capitalization rate = NOI / Property Value × 100. Property's annual return excluding financing.
Result
Cap rate
6.00%
Moderate (typical mid-market US)
- NOI$24,000
- Property value$400,000
- Cap rate (%)6.000
Step-by-step
- Cap = NOI / Value × 100 = 24,000 / 400,000 × 100 = 6.00%.
How to use this calculator
- Enter annual NOI (after operating expenses, before mortgage).
- Enter purchase or current value.
- Read cap rate; compare with comparable local properties.
About this calculator
Cap rate is the property's annual return based on NOI and current value, ignoring financing. Lower cap rates mean higher prices relative to income — common in expensive markets (NYC, SF) where investors bet on appreciation. Higher cap rates suggest more income but often more risk or location issues. Compare like-kind properties in the same market.
Frequently asked
Cap rate ignores financing. Cash-on-cash divides by money invested (cash down + closing). Same property looks very different on each metric — leverage amplifies cash-on-cash.
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