Cap Rate Calculator
Calculate the capitalization rate for any investment property. Enter income and expenses to see NOI and cap rate instantly — no financing required.
Your cap rate of 6.50% compared to typical ranges across property types.
| Property Type | Typical Cap Rate | Your Cap Rate | vs. Low | vs. High |
|---|---|---|---|---|
| Single Family | 4% – 6% | 6.50% | +2.50% | +0.50% |
| Multifamily (2-4) | 5% – 7% | 6.50% | +1.50% | -0.50% |
| Small Apartment (5+) | 5% – 8% | 6.50% | +1.50% | -1.50% |
| Commercial/Retail | 6% – 10% | 6.50% | +0.50% | -3.50% |
| Industrial | 5% – 8% | 6.50% | +1.50% | -1.50% |
| Office | 5% – 9% | 6.50% | +1.50% | -2.50% |
Determine property value from your target cap rate, using your current NOI of $26,000/yr.
How to Use This Cap Rate Calculator
Enter three values to get your cap rate instantly:
- Property Value: Current market value or purchase price. Use the asking price when evaluating a potential buy.
- Annual Rental Income: Total gross rent you expect to collect per year. Use market rent for vacant properties.
- Annual Operating Expenses: All costs to operate the property: property taxes, insurance, property management fees, maintenance, and a vacancy allowance. Do NOT include mortgage payments.
The calculator instantly shows your cap rate, NOI, Gross Rent Multiplier, and expense ratio.
The Cap Rate Formula
Cap Rate = NOI / Property Value × 100
Example: $36,000 rent − $10,000 expenses = $26,000 NOI
Cap Rate = $26,000 / $400,000 × 100 = 6.5%
Cap rate excludes mortgage payments because it measures the property's intrinsic return — independent of how it's financed. This makes it the standard tool for comparing properties across different purchase structures.
Gross Rent Multiplier (GRM)
GRM = Property Price / Annual Gross Rent. A GRM of 10 means you're paying 10 years' worth of gross rent. Lower GRM = potentially better value. GRM is a quick screening tool; cap rate is more precise.
Example: Comparing Two Properties
Property A vs Property B
| Property A | Property B | |
| Purchase Price | $400,000 | $300,000 |
| Annual Rent | $36,000 | $24,000 |
| Annual Expenses | $10,000 | $8,000 |
| NOI | $26,000 | $16,000 |
| Cap Rate | 6.5% | 5.3% |
| GRM | 11.1x | 12.5x |
Property A has a higher cap rate and lower GRM — stronger investment metrics. But location, condition, and growth potential also matter.