Real estate calculator
Editor
Review the property income, vacancy, operating expense, and optional valuation assumptions in one clean form. The cap rate, NOI, chart, and breakdown update instantly as you compare scenarios.
Start with the property value and annual income assumptions, then adjust vacancy and operating expenses to see how the estimated cap rate changes.
Property income
These inputs shape the annual income side of the cap rate estimate before operating expenses are removed.
Operating expenses
Use one annual operating expense total for the simplest workflow, or turn on itemized annual expenses to auto-sum the categories.
Active annual operating expenses
$7,000.00
Using the single annual operating expense total you entered.
Cap rate uses net operating income and property value. Debt service, financing structure, taxes, and exit assumptions belong in other analyses, not in the cap rate formula itself.
Optional valuation helper
Add a target cap rate if you want to estimate the implied property value based on the NOI produced by your current assumptions.
Implied property value
Unavailable
Enter a target cap rate to unlock the reverse valuation helper.
Results
Estimated cap rate
5.27%
Net operating income (NOI)
$15,800.00
Effective gross income
$22,800.00
Annual operating expenses
$7,000.00
Annual gross income
$24,000.00
Vacancy loss
$1,200.00
Gross rental income
$24,000.00
Other income
$0.00
Vacancy loss
-$1,200.00
Effective gross income
$22,800.00
Operating expenses
-$7,000.00
Net operating income
$15,800.00
| Item | Value | Notes |
|---|---|---|
| Property value / purchase price | $300,000.00 | Used as the cap rate denominator in this estimate. |
| Gross rental income | $24,000.00 | Scheduled annual rent before vacancy is applied. |
| Other income | $0.00 | Parking, laundry, storage, or other recurring property income. |
| Vacancy loss | -$1,200.00 | 5% of annual gross rental income in this estimate. |
| Effective gross income | $22,800.00 | Gross rental income plus other income minus vacancy loss. |
| Operating expenses total | -$7,000.00 | Using the single annual operating expense total from the input panel. |
| Net operating income (NOI) | $15,800.00 | Effective gross income minus operating expenses, before financing. |
| Cap rate | 5.27% | Calculated as NOI divided by property value or purchase price. |
How it works
A cap rate calculator estimates the capitalization rate for an income-producing property by comparing annual net operating income with the property value or purchase price. Investors often use it as a quick way to compare deals on an unlevered basis.
The standard formula is cap rate equals NOI divided by property value. In this calculator, the result is shown as a percentage, so the ratio is multiplied by 100 after annual NOI is compared with the property value you entered.
NOI stands for net operating income. It represents effective gross income after vacancy minus operating expenses, before any financing costs. That makes NOI one of the most common starting points for evaluating how a property performs on its own.
Vacancy reduces the rent a property is likely to collect over time. Even strong rentals can experience turnover, downtime, or collection friction, so applying a vacancy allowance usually gives a more realistic income estimate than using gross scheduled rent alone.
Property taxes, insurance, HOA fees, management, utilities, and maintenance all reduce the income left over for NOI. If those expenses are underestimated, the cap rate can look stronger than the property may actually support in real operation.
Mortgage payments are not part of cap rate because cap rate is meant to reflect the property's operating yield before financing. Two buyers can have different loans on the same property, but the property's NOI and cap rate do not change just because their financing structures differ.
Investors often use cap rate to compare properties, neighborhoods, or asking prices quickly. It can help frame whether the property appears to offer a higher or lower operating yield than another opportunity with similar size, asset type, or market conditions.
Cap rate is helpful, but it does not guarantee investment quality. Financing, location, tenant stability, deferred maintenance, market growth, capital needs, and execution risk can all change whether a property is actually attractive in practice.