Calculator
Cap rate calculator
Capitalization rate is net operating income divided by purchase price — the unleveraged return rate investors use to compare properties across markets.
Cap rate
Net operating income divided by purchase price — the unleveraged return rate investors compare across properties.
This calculator applies a standardized assumption (typically 40% of gross rent for expenses) and does not account for property-specific taxes, insurance, capital expenditures, vacancy, or financing. Actual cap rates vary by deal. Not a substitute for professional analysis.
How it works
Cap rate = NOI / property price, where net operating income is effective rent (gross rent × (1 − vacancy)) minus operating expenses (taxes, insurance, repairs, management — typically 30–40% of effective rent for single-family rentals).
A $400,000 property with $30,000 in NOI has a 7.5% cap rate. Cap rates rise as markets get riskier or rents grow faster than prices; they fall in supply-constrained urban markets where price appreciation does most of the work.
See typical cap rates for any ZIP on its page — or check the rental yield calculator for the simpler gross-yield version.