Operating yield

Cap Rate Calculator

Compare a property’s net operating income with its value before the effects of a particular loan.

Decision question

How does the property perform?

Property Details
Enter a value in US dollars.
Enter a value in US dollars per month.
Enter a value in percent.
Operating Expenses
Enter a value in US dollars per year.
Enter a value in US dollars per year.
Enter a value in percent.
Enter a value in percent.
Enter a value in US dollars per month.
Enter a value in US dollars per month.

This calculator provides estimates and educational information for planning and comparison, not financial, investment, tax, legal, lending, or real estate advice.

Operating analysis

Build cap rate from the income and costs underneath it

Cap rate is most useful when comparable properties use the same income period, expense treatment, and value basis.

Primary formula

Cap rate = net operating income ÷ property value × 100

Gross annual rent is reduced by vacancy to produce effective rental income. Recurring operating costs are then subtracted to produce NOI.

Interpret the result in context

A cap rate is an operating comparison, not a universal property rating. Location, asset type, condition, lease quality, expected capital work, and market risk can explain why otherwise similar properties trade at different rates.

Know what is outside this calculation

The model excludes mortgage payments, acquisition and closing costs, income taxes, depreciation, appreciation, and one-time renovations. Use the other-expenses field only for recurring operating costs that belong in the property’s NOI.

Learn the method

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About the Cap Rate Calculator

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