Max Purchase Price (Target Cap Rate)
Max purchase = NOI / target cap rate. Reverse-engineer from desired return.
Result
General calculation reads
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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?+
Why include vacancy?+
Why 35-50% op expenses?+
Does cap rate include mortgage?+
Higher rent → higher max price?+
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