Enter the purchase price, annual rental income, operating expenses, and vacancy rate. We compute net operating income (NOI) and the capitalization rate instantly — nothing is sent anywhere.
This tool is provided for general educational and informational purposes only. It is not financial, tax, or investment advice and does not account for your specific situation. Confirm figures with your own analysis and a qualified professional before making decisions.
The capitalization rate is a property’s net operating income (NOI) divided by its price or value, expressed as a percentage. It estimates the unleveraged annual return and lets you compare properties regardless of financing.
Cap rate = NOI ÷ purchase price × 100. NOI is gross rental income, reduced for vacancy, minus operating expenses (taxes, insurance, maintenance, management) — but not mortgage payments.
It depends on the market and risk. Many investors target 5–10%; lower cap rates often mean lower-risk, higher-priced markets, while higher cap rates can mean more risk or upside. Compare against similar local properties.
No. Cap rate is calculated before financing, so a mortgage is excluded from operating expenses. To factor in your loan, use a cash-on-cash return calculator instead.
Free tool by Hatchkeep. Related: cash-on-cash return calculator · gross rent multiplier calculator · rental ROI calculator