Cap Rate Calculator

There's no universal 'good' cap rate — it depends heavily on the market, property type, and risk level, with lower cap rates typically reflecting lower-risk properties in strong markets (where investors accept a smaller yield for more stability) and higher cap rates reflecting higher risk or weaker markets. This calculator computes the ratio itself; comparing it against similar properties in your specific market is how you'd judge whether a given cap rate is attractive.

If you leave Net Operating Income at its default of zero, the calculator automatically computes it as Annual Rent minus Operating Expenses instead, so you only need to enter one or the other depending on which figures you have on hand. If you do enter a nonzero Net Operating Income directly, that value is used as-is and takes priority over the rent-minus-expenses calculation.

Yes, assuming the property's Net Operating Income stays the same — Cap Rate is NOI divided by Property Value, so for any fixed income stream, a higher purchase price mathematically produces a lower cap rate. This is exactly why cap rate is used to compare 'am I overpaying' across properties with similar income: the same rental income at a higher price always yields a lower percentage return by this measure.

This runs the cap rate formula in reverse — instead of computing a rate from a known price, it answers what price a property with your calculated Net Operating Income would need to sell for at a chosen market cap rate. Investors use this to sanity-check an asking price: if a property's actual price is well above this calculated value, it may be overpriced relative to the income it produces at prevailing market cap rates.