Cap Rate Calculator

The cap rate calculator can be used to accurately calculate the capitalization rate of real estate. In the real estate lending and appraisal sector, the cap rate is a valuable metric that uses the amount of income a property is able to generate as the means of estimating that property's value.

To quickly and easily determine the cap rate of your property, complete the form below and press "Calculate".

Capitalization Rate Calculator

What is a Cap Rate?

The capitalization rate, more commonly known by its abbreviation "cap" rate, is widely used to evaluate the worth of investment properties and calculate potential returns on investment.

The cap rate reflects your investment property's rate of return as measured by the amount of income you expect the property to produce.

This measurement can be more simply described as the ratio of net operating income to property asset value.

A cap rate is generally expressed as a percentage, with a higher percentage indicating a better rate of return but also an increased level of associated risk.

Capitalization Rate Formula

We apply the following formulas in our cap rate calculator to determine the capitalization rate for your property:

Capitalization Rate = Net Operating Income / Purchase Price

Net Operating Income (NOI) = Gross Operating Income − Operating Expenses

You may also be interested in our DSCR (Debt Service Coverage Ratio) Calculator or/and Prorated Rent Calculator

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