Cap Rate Calculator
Calculate capitalization rate for any investment property and determine property value from NOI.
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Frequently Asked Questions
What is cap rate and how is it calculated?
Capitalization rate = Net Operating Income (NOI) / Property Value. NOI = Gross rent minus all operating expenses (taxes, insurance, maintenance, management) but excluding mortgage payments. Cap rate measures the unlevered yield of a property — useful for comparing properties regardless of financing. A $350,000 property with $21,000 NOI has a 6% cap rate.
What is a good cap rate in 2026?
Cap rates in 2026 vary by property type and market: multifamily 4-6% in gateway cities, 6-8% in secondary markets. Industrial 4-6%. Retail 5-7%. Office 6-9% (higher due to uncertainty). Single-family rentals 4-7%. Higher cap rates generally mean higher risk or lower growth markets. Rising interest rates push cap rates up (prices down).
Cap rate vs cash-on-cash return: what is the difference?
Cap rate ignores financing — it measures the property yield as if bought all-cash. Cash-on-cash return includes your mortgage payment and measures actual cash flow relative to cash invested. If you buy at a 6% cap rate with a 7% mortgage rate, you may have negative cash flow despite a good cap rate. Use cap rate for valuation, cash-on-cash for investment decisions.