Cap Rate Calculator

Key Takeaways

• Cap Rate Calculator estimates cap rate of 9.00% and net operating income (annual) of $27,000 for this scenario.
• Cap rate divides a property's net operating income by its price, so it measures income return before any mortgage. This scenario produces $27,000 of NOI ($2,250 per month) from $34,200 of effective rental income after vacancy.
• It depends on the market and the risk, but many investors look for roughly 5–8% in stable areas and higher where rents are strong relative to prices. This scenario comes out at 9.00%. Very high cap rates usually signal higher risk or understated expenses rather than a free lunch.

Calculation Output

Result Chart

Key Facts

How This Estimate Works

• Cap rate divides a property's net operating income by its price, so it measures income return before any mortgage. This scenario produces $27,000 of NOI ($2,250 per month) from $34,200 of effective rental income after vacancy.
• That makes the cap rate 9.00% — in the 8–10% range — strong income on paper, which usually means the deal deserves extra diligence on condition, tenant quality, and whether every expense is really counted.
• Operating expenses total $7,200 per year, or about 21.1% of effective income. Cap-rate comparisons only work when every property counts expenses the same way, so check that taxes, insurance, maintenance, HOA, and management are all included.
• At a 6% market cap rate, this income supports a value of about $450,000 — roughly $150,000 above the $300,000 price, which suggests the income justifies the price if the expense estimates hold.
• Cap rate deliberately ignores financing: the same property shows the same cap rate whether you pay cash or borrow. Pair it with a debt-service check so a good cap rate does not hide a payment the rent cannot carry.

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