Cap Rate Calculator
What is this property's capitalization rate? Cap Rate = Annual NOI ÷ Property Value × 100.
Calculate Cap Rate →Calculate Your Cap Rate
Results update as you change any input.
Estimates are for educational purposes only · Not investment advice
Cap rate is always based on NOI before mortgage principal and interest. Financing costs are never subtracted here — that's what the Rental Cash Flow Calculator is for.
Compare Properties
Enter up to 3 properties by value and NOI to compare cap rate side by side.
| Property | Value | NOI | Cap Rate |
|---|---|---|---|
| Property A | $350,000 | $21,000 | 6.0% |
| Property BHighest Calculated Cap Rate | $425,000 | $29,750 | 7.0% |
We highlight the highest calculated cap rate — this is not a claim that it's the best investment.
What Property Value Matches My Target Cap Rate?
A reverse calculation — not an appraisal or a claim about market value.
Worked Example
A $320,000 property with $20,540 in annual NOI:
Cap Rate = $20,540 ÷ $320,000 × 100 = 6.4%
What Is a Good Cap Rate?
There's no single "good" number — cap rates vary by market, property type and risk. As a general reference point commonly used in real estate:
- 4–5%: common in expensive, low-risk, high-demand markets — lower income relative to price, often traded for stability and appreciation potential.
- 5–8%: a typical range for many stabilized rental properties in moderate markets.
- 8%+: often reflects higher perceived risk (weaker market, older property, higher vacancy/turnover) rather than simply "a better deal."
Compare a property's cap rate against similar properties in the same local market rather than against these general ranges alone.
What Cap Rate Does — and Does Not — Tell You
Cap rate is useful for comparing operating income relative to property value. It does not directly account for:
- Mortgage financing
- Down payment
- Tax situation
- Appreciation
- Principal paydown
- Future rent growth
- Major future repairs
- Selling costs
- Individual risk tolerance
Read the Full Cap Rate Guide → · See Our Cap Rate Methodology →
Frequently Asked Questions
Does cap rate account for my mortgage?
No — and this is intentional. Cap rate is calculated using net operating income (NOI) before mortgage principal and interest. It measures a property's operating performance independent of how it's financed, which is what makes it useful for comparing properties bought with different down payments or loan terms.
Is a higher cap rate always better?
Not automatically. Cap rate is useful for comparing operating income relative to property value, but it doesn't account for financing, your tax situation, appreciation potential, future rent growth, major upcoming repairs, selling costs, or your own risk tolerance. A higher cap rate can also reflect higher risk.
What is "Implied Value at Entered Cap Rate"?
It's a reverse calculation — dividing your NOI by a target cap rate to see what property value would produce that cap rate. This is not an appraisal or a claim about market value; it's a scenario estimate based on the NOI and target rate you enter.
Why does the calculator have Simple and Detailed modes?
Simple Mode is for when you already know a property's annual NOI. Detailed Mode walks through rent, vacancy, and operating expenses to calculate NOI for you — useful when you're evaluating a property from scratch.
Can I compare multiple properties at once?
Yes — enter up to 3 properties with their value and NOI to see cap rate side by side. We highlight the highest calculated cap rate, but we don't call it the "best investment" — that depends on factors this tool doesn't know about your goals and risk tolerance.
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Calculate Max Offer →Evaluating a Specific Property?
Cap rate is one data point. Analyze the full picture of a specific property with Reaixo.
Analyze the Property with Reaixo →Related Reports
Learn More
Helpful Resources
Educational Use Only: Reaixo provides estimates and scenario calculations for informational and educational purposes. Reaixo is not acting as a real-estate broker, appraiser, lender, financial advisor, tax advisor, accountant, or investment advisor. Rental income, vacancy, expenses, property values, financing terms and investment performance can vary materially. Calculator results are not an investment recommendation, appraisal, loan offer, or guarantee of future returns.