Max Purchase Price (Target Cap Rate)
Max purchase = NOI / target cap rate. Reverse-engineer from desired return.
Result
Loading calculator…
—
How to use this calculator
- Enter monthly rent.
- Set vacancy % and op expense %.
- Choose target cap rate.
About this calculator
Cap rate = NOI / property value. Target a cap rate (your required return); back out max price you can pay. NOI = effective gross income − operating expenses. Op expenses typically 35-50% of EGI (taxes, insurance, maintenance, management, vacancy reserve, utilities if landlord-paid). Higher target cap = lower max price = stronger discipline. Investors typically target 6-10% cap rate; lower in hot markets, higher for tertiary markets.
Frequently asked
What's a good cap rate?+
Class A urban: 4-6%. Suburban SFR: 6-8%. Tertiary markets: 8-12%. Higher cap = riskier neighborhood usually.
Why include vacancy?+
8% vacancy ≈ 1 month/year (realistic for SFR). EGI = realistic income; gross is too optimistic.
Why 35-50% op expenses?+
Empirical norm. Includes taxes, insurance, repairs (1% / yr of value), CapEx reserve, management 8-10%. Newer/smaller properties trend lower.
Does cap rate include mortgage?+
No — cap is unlevered return. Adding leverage changes cash-on-cash but not cap rate of property.
Higher rent → higher max price?+
Yes — proportional. Doubled rent = doubled NOI = doubled max price.
Related calculators
BRRRR Method Calculator
Buy + Rehab → Rent → Refinance (75% LTV) → Repeat. Compute cash recovered + ongoing cash flow.
Fix-and-Flip Profit Calculator
Profit = sale − purchase − rehab − holding − selling costs.
Property Holding Cost Calculator
Holding = (taxes + insurance + utilities + interest) × months.
Rehab Budget Calculator
Sum cosmetic / mid / heavy rehab line items + contingency.
After-Repair Value (ARV) Calculator
ARV = avg comp $/ft² × subject ft². Average from 3-5 sold comps within 1 mile, last 6 months.
Cash-Out Refinance Calculator
Cash out = (new loan − old loan payoff) − closing costs.