Cap rate calculator
Free cap rate calculator: gross rent, vacancy and operating expenses give the net operating income, the cap rate and the price that hits your target cap rate. Example: with typical numbers the cap rate comes to 6.50%. Free, no sign-up, every step shown.
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Read the guide: Rental property cash flow, cap rate and cash-on-cash return: a simple guide →Below your target. At 8.00% the price would be about $243,750.
In LeadCounty every property file opens this calculator with the county's value, tax owed and sales already filled in.
Get the real numbers for every property, already filled in.
In LeadCounty every property page carries its county record: value, yearly tax and any amount owed, every sale with its price, building facts, the owner and mailing address, and nearby sales (as each county publishes them). The deal calculator on each property uses them. Find the sellers with 37 seller lists, then run the deal in one place. The same calculators also run inside the app.
- 7-day free trial (the Explore trial needs no card)
- Refreshed every week from official records
- No contract, cancel any time
How to use the cap rate calculator
- Net operating income (NOI) = rent and other income − vacancy − operating expenses. Leave the mortgage out.
- Cap rate = NOI ÷ price. It shows the yearly return as if you paid cash, so you can compare properties.
- Turn it around to price a deal: value = NOI ÷ the cap rate you want.
The formula
Cap rate = net operating income ÷ price. Net operating income = rent − vacancy − operating costs, before the mortgage.
Worked example
With price or value of $300,000, gross rent of $30,000, other income of $0, vacancy of 5% and operating expenses of $9,000, the cap rate is 6.50%. Below your target. At 8.00% the price would be about $243,750.
Common mistakes
- Using gross rent instead of net operating income.
- Including the mortgage payment, which a cap rate leaves out.
- Comparing cap rates of different property types.
Estimates for planning only, not financial advice.
Questions
What is a good cap rate?
There is no single number. Lower cap rates (4% to 6%) are common in expensive, stable areas and higher ones (8% or more) in cheaper areas with more risk. Compare properties of the same type in the same market.
Why leave out the mortgage?
Cap rate measures the property, not your loan. Use the rental cash flow calculator for cash flow with the loan.
Is cap rate the same as return on investment?
No. Cap rate ignores the mortgage. Cash-on-cash return includes it and shows the return on the cash you put in.
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Portfolio owners and 36 more seller lists from county records, refreshed weekly. Tested on real sales: see the proof (/proof).
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