Cap Rate Calculator

How to Use This Calculator

1. Enter the property price and annual NOI to instantly get the cap rate.
2. Use the From Expenses tab to build NOI from gross rent minus vacancy and operating expenses.
3. Use the Property Valuation tab to find what a property is worth at a target cap rate.
4. The Professional tier gives full analysis: CoC return, DSCR, price per unit, and GRM.

Formula

Example

Frequently Asked Questions

• What is a cap rate? ▼
  Cap Rate = NOI ÷ Property Price. It measures a property's income-generating potential independent of financing. A higher cap rate means more income relative to price (and usually more risk).
• What is a good cap rate? ▼
  It depends on the market. In prime urban markets, 4–5% is common. In secondary markets, 6–8% is typical. Higher-risk areas may see 8–10%+. Compare to similar properties in the same market rather than using a universal benchmark.
• What is the difference between cap rate and cash-on-cash return? ▼
  Cap rate ignores financing (uses total property value). Cash-on-cash return uses actual cash invested (down payment) and actual cash flow after mortgage payments. Cap rate is a property metric; CoC is an investor return metric.
• What is the Gross Rent Multiplier? ▼
  GRM = Property Price ÷ Annual Gross Rent. It's a quick valuation screen (lower is better for buyers). A GRM of 8 means you'd pay 8 years of gross rent to buy the property. It's faster than cap rate but ignores expenses.
• What is Debt Service Coverage Ratio? ▼
  DSCR = NOI ÷ Annual Debt Service. Lenders typically require DSCR ≥ 1.25. A DSCR of 1.0 means NOI exactly covers the mortgage; below 1.0 means the property can't service the debt from income alone.

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