Quick answer
Capitalisation rate = net operating income ÷ property value × 100. NOI of $12,000 on a $200,000 property is a 6% cap rate.
Enter the net operating income and property value. The calculator returns the cap rate.
Related tools: Vacancy Rate Calculator: Share of rental units that are vacant, with optional lost rent. Rental Property Calculator: Cash flow, cap rate and cash-on-cash return of a rental. Cash on Cash Return Calculator: Annual pre-tax cash flow relative to the cash you invested.
How to use the Cap Rate Calculator
- Enter net operating income (per year) ($).
- Enter property value ($) (above 0).
- Press Calculate to see the result, and use Reset to start again.
| Input | What to enter | Allowed values |
|---|---|---|
| Net operating income (per year) | A number, in $ | — |
| Property value | A number, in $ | > 0 |
Formula and method
Formula
cap rate = NOI ÷ property value × 100
IEEE-754 double precision; money shown to cents, rates to 4 decimals. Results are estimates, not financial advice.
NOI excludes financing costs.
Worked examples
These examples are verified: each one is an automated test case that the live calculator must reproduce exactly.
Example 1
Inputs: Net operating income (per year) = 12000; Property value = 200000.
| Result | Value |
|---|---|
| Cap rate | 6% |
Example 2
Inputs: Net operating income (per year) = 15000; Property value = 300000.
| Result | Value |
|---|---|
| Cap rate | 5% |
The first line is the headline result (cap rate). IEEE-754 double precision; money shown to cents, rates to 4 decimals. Results are estimates, not financial advice.
NOI definition
Net operating income is rental income minus operating expenses (taxes, insurance, maintenance, management) but before mortgage payments. A higher cap rate means a higher yield and usually higher risk.
Using it
Compare properties in the same market. Cap rates of 4 to 10% are common depending on the area and property type. The cap rate ignores financing, so it isn't the same as cash-on-cash return.
How the result changes with net operating income
Holding every other input at the first worked example, this table changes only net operating income. It shows how sensitive the answer is to that one value; each row was produced by running this calculator.
| Net operating income | Cap rate |
|---|---|
| 6000 | 3% |
| 12000 | 6% |
| 24000 | 12% |
| 48000 | 24% |
What happens with invalid input
These messages are produced by the calculator itself, so you know what to fix.
- Property value: entering "0" shows "Property value must be greater than 0." beside that field and no result.
Choosing between the Cap Rate Calculator and similar calculators
Each row shows what a related calculator on this site asks for and what it returns, so you can pick the one that matches your question.
| Calculator | You enter | It returns |
|---|---|---|
| [Vacancy Rate Calculator](/real-estate/vacancy-rate-calculator/) | vacant units and total units | Vacancy rate |
| [Rental Property Calculator](/real-estate/rental-property-calculator/) | purchase price, down payment and mortgage rate | Annual cash flow |
| [Cash on Cash Return Calculator](/real-estate/cash-on-cash-return-calculator/) | annual pre-tax cash flow and total cash invested | Cash-on-cash return |
| [House Flipping Profit Calculator](/real-estate/house-flipping-profit-calculator/) | purchase price, renovation cost and holding costs | Profit |
| [Real Estate ROI Calculator](/real-estate/real-estate-roi-calculator/) | purchase price, sale price and net income during ownership | ROI |
Background: rental property metrics
Rental property metrics answer different questions. The cap rate is net operating income divided by the purchase price and ignores financing; cash flow is income minus operating expenses minus debt service; cash-on-cash return divides annual cash flow by the cash you actually invested. Rules of thumb such as the 1% rule (monthly rent at least 1% of the price) are quick screens, not decisions.
Check the assumptions behind any result: vacancy, management fees, repairs and taxes. Published benchmark ranges for a good cap rate or return vary between sources.
Assumptions and limitations
- Value must be positive
Estimates only. Taxes, fees and lender or authority rules vary by place and date, so confirm figures with the relevant authority or professional.
If a required value is empty, not a number, or outside its allowed range, the form marks that field with a message and shows no result instead of a misleading number. The automated checks deliberately try invalid entries for property value to confirm this.
Frequently asked questions
How do I find value from the cap rate?
Value = NOI ÷ cap rate.
Is a higher cap rate better?
More income per dollar, but often more risk.
Does it include the mortgage?
No. The cap rate uses net operating income before debt service, so it ignores financing.
What does the Cap Rate Calculator calculate?
Capitalization rate of an income property. It returns Cap rate.
What formula does the Cap Rate Calculator use?
cap rate = NOI ÷ property value × 100. NOI excludes financing costs.
What do I need to enter in the cap Rate Calculator?
You enter Net operating income (per year) ($) and Property value ($).
How is the result rounded or limited?
IEEE-754 double precision; money shown to cents, rates to 4 decimals. Results are estimates, not financial advice. Value must be positive.
What is an example of a cap Rate result?
With net operating income (per year) 12000 and property value 200000, the cap rate is 6%.
Can I rely on this calculator for a decision?
Estimates only. Taxes, fees and lender or authority rules vary by place and date, so confirm figures with the relevant authority or professional. For this calculator in particular: Value must be positive.
Related calculators
- Vacancy Rate Calculator — Share of rental units that are vacant, with optional lost rent.
- Rental Property Calculator — Cash flow, cap rate and cash-on-cash return of a rental.
- Cash on Cash Return Calculator — Annual pre-tax cash flow relative to the cash you invested.
- House Flipping Profit Calculator — Profit and return on cost of a renovate-and-sell project.
- Real Estate ROI Calculator — Total return on a property from sale gain and net income.
- Rental Yield Calculator — Gross and net rental yield on a property.
Sources
- Standard time-value-of-money relations (e.g. Brealey, Myers & Allen, Principles of Corporate Finance)
Content last reviewed 2026-11-04. Formulas and worked examples are checked by automated tests against independently computed values.