What is the cap rate formula?

Cap rate = net operating income ÷ property value × 100. NOI = rent after vacancy + other income − operating expenses.

Should mortgage payments be included?

No. Cap rate measures the property independent of financing, so debt service is excluded. Use cash-on-cash return to include the mortgage.

What is a good cap rate?

It depends on market and risk. Many residential markets trade around 4–8%; higher cap rates usually mean higher risk or lower-demand areas.

What is gross rent multiplier?

GRM = property price ÷ gross annual rent. It is a quick screening ratio that ignores expenses.

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Cap Rate Real Estate Calculator

Calculate net operating income (NOI), capitalization rate and gross rent multiplier for a rental or commercial property.

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Property value / price ($)

Gross annual rent ($)

Vacancy & credit loss (%)

Other annual income ($)Parking, laundry, storage

Annual operating expenses ($)Tax, insurance, repairs, management — not mortgage

Effective gross income

$45,600.00

Net operating income (NOI)

$31,600.00

Cap rate

6.32%

Gross rent multiplier

10.42

Operating expense ratio

30.7%

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About Cap Rate Real Estate Calculator

Cap rate shows a property’s unleveraged return: net operating income divided by property value. Enter the value, gross rent, vacancy allowance and operating expenses to get effective gross income, NOI, cap rate and GRM.

How to use Cap Rate Real Estate Calculator

Enter the property value or purchase price.
Add gross annual rent, a vacancy allowance and any other income.
Enter annual operating expenses (excluding mortgage payments) to see NOI and cap rate.

Key features

Net operating income with vacancy allowance
Cap rate and gross rent multiplier
Operating expense ratio
Excludes financing, as cap rate should
Private in-browser calculation

Frequently asked questions

What is the cap rate formula?: Cap rate = net operating income ÷ property value × 100. NOI = rent after vacancy + other income − operating expenses.
Should mortgage payments be included?: No. Cap rate measures the property independent of financing, so debt service is excluded. Use cash-on-cash return to include the mortgage.
What is a good cap rate?: It depends on market and risk. Many residential markets trade around 4–8%; higher cap rates usually mean higher risk or lower-demand areas.
What is gross rent multiplier?: GRM = property price ÷ gross annual rent. It is a quick screening ratio that ignores expenses.
Is my data private?: Yes. Nothing leaves your browser.

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