Cap Rate Calculator
Capitalization rate and NOI, instantly. No signup.
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Cap rate formula
Cap rate = NOI ÷ property value × 100. NOI = (annual rent − vacancy) − operating expenses. The mortgage is deliberately excluded so properties can be compared regardless of financing. For a leveraged return, use our rental property calculator, which also computes cash-on-cash return.
Frequently asked questions
Does cap rate include the mortgage?
No — it excludes financing on purpose so deals can be compared apples-to-apples. Use cash-on-cash return to see your leveraged return.
What is a good cap rate?
Roughly 5–10%. Prime metros trade at 4–6%; smaller or riskier markets at 8–12%. Always compare within the same market and property class.
Higher cap rate = better deal?
Higher cap rate means more income per dollar of price, but usually also more risk (weaker tenants, older buildings, softer markets). It's a price signal, not a quality score.