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RealEstateTools

Uniform worksheet · Property Management

Form RET-305 · Effective August 2026 · Borrower’s copy

Cap Rate Calculator

Calculate capitalization rate for investment property valuation.

Property Details

$

Income

$

Expenses

$

Includes taxes, insurance, maintenance, HOA, vacancy

Cap Rate

0.00%

Net Operating Income

$0

Breakdown

Gross Rent$0
Operating Expenses$0
Net Operating Income$0

How to Use This Cap Rate Calculator

See Methodology

Our free cap rate calculator computes the capitalization rate for rental properties, helping you evaluate investment performance independent of financing.

Cap rate = (Net Operating Income / Purchase Price) x 100. It measures the property's unleveraged return, making it ideal for comparing properties regardless of how they're financed.

Use cap rate alongside cash-on-cash return and ROI for complete investment analysis. Higher cap rates mean better returns but may indicate higher risk.

Related Topics

How Cap Rates Differ by Market ·BRRRR Strategy Explained ·

Frequently Asked Questions about Capitalization Rate

  • What is a good cap rate for rental property?

    Generally 5-10% is solid. Higher cap rates (8-10%) indicate higher risk. Lower cap rates (4-6%) suggest premium locations with lower risk.

  • How do I calculate cap rate?

    Cap rate = (Net Operating Income / Purchase Price) x 100. NOI = annual rent - operating expenses (excluding mortgage). A property with $20,000 NOI and $250,000 price has an 8% cap rate.

  • How does cap rate differ from cash-on-cash return?

    Cap rate ignores financing — it's based on NOI divided by purchase price. Cash-on-cash considers your actual cash invested and mortgage payments. Use both metrics.

  • What is a good cap rate for commercial property?

    Commercial cap rates are typically higher: 6-12% depending on property type, location, and tenant quality. NNN leases with strong tenants have lower cap rates.

  • How do cap rates vary by market?

    Hot markets (NYC, SF) have lower cap rates (3-5%) due to high prices. Secondary markets have higher cap rates (7-10%) reflecting higher risk and lower demand.

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