Cap Rate Calculator
Calculate the capitalization rate (cap rate) for real estate investments based on net operating income, property value, and expenses. Understand real estate investment returns and profitability.
Step 1: Property Details
Understanding Cap Rate
The capitalization rate (cap rate) is a real estate valuation measure used to compare different real estate investments. It represents the rate of return on a real estate investment property based on the income the property is expected to generate.
Step 2: Calculation Settings
About Cap Rate Calculation
Cap Rate = Net Operating Income / Property Value × 100%. A higher cap rate typically indicates higher risk but potentially higher returns, while a lower cap rate suggests lower risk and more stable investment.
Cap Rate Calculation Results
Capitalization Rate (Cap Rate)
Real Estate Investment Comparison
| Property Type | Typical Cap Rate | Property Value | Annual NOI | Risk Level |
|---|
Cap Rate Analysis
Cap Rate Formula
Cap Rate = (Annual Rental Income – Annual Expenses) / Property Value × 100%
The cap rate measures the rate of return on a real estate investment property. It’s calculated by dividing the net operating income (NOI) by the current market value or purchase price of the property, then multiplying by 100 to get a percentage.
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