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Calculators/Real Estate & Mortgages
Cap Rate Calculator
Calculate the capitalization rate of any investment property — the core metric every real estate investor needs.
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Cap Rate Analysis
Cap Rate6.00%
< 5%
Low Yield
5–8%
Moderate
8%+
Strong
Cap Rate
6.00%
NOI
$18,000/yr
Rating
Moderate
How to Use This Calculator
1
Calculate Net Operating Income (NOI)
NOI = Gross Annual Rent − Operating Expenses. Operating expenses include property taxes, insurance, maintenance, management fees, and vacancy allowance. Do NOT include mortgage payments — cap rate is financing-agnostic.
2
Enter the property's current market value
Use the current appraised value or purchase price — not what you paid 10 years ago. Lenders use current value to assess risk.
3
Interpret the result
Cap Rate = NOI ÷ Property Value. A higher cap rate means more income relative to price (higher yield, often higher risk). A lower cap rate means the market values the property highly relative to income (lower risk, lower yield).
Real-World Examples
Houston Duplex
Gross Annual Rent
$28,800
Operating Expenses
$12,000
NOI
$16,800
Property Value
$240,000
ResultCap Rate: 7.0%
Solid Houston cap rate. Above the 6% threshold most investors target for positive cash flow in Texas.
Austin Condo
Gross Annual Rent
$30,000
Operating Expenses
$14,000
NOI
$16,000
Property Value
$420,000
ResultCap Rate: 3.8%
Low cap rate typical of Austin. Investors accept lower yields expecting appreciation — a speculative bet, not pure income play.
Frequently Asked Questions
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