Cap Rate Calculator
Calculate property capitalization rate from net operating income and value, and estimate implied property value from a target cap rate.
Calculate real estate cap rate
Calculate capitalization rate from annual NOI and property value, or estimate value from a target cap rate.
How the Cap Rate Calculator works
Capitalization rate is commonly calculated as annual net operating income ÷ property value. NOI is property operating income after normal operating expenses but before financing costs such as mortgage principal and interest. The reverse relationship—NOI ÷ target cap rate—provides an implied value under that selected income yield.
How to use this cap rate calculator
Enter a stabilized annual NOI and the property value or purchase price you want to evaluate. If you also enter a target cap rate, the calculator shows the corresponding implied value. Keep rent, vacancy, other income and operating expenses on the same annual basis before calculating NOI.
How to interpret the result
Cap rate is an unlevered operating-income yield, useful for comparing properties or pricing assumptions. A lower cap rate corresponds to a higher value for the same NOI, while a higher cap rate corresponds to a lower value. It does not tell you the return on the investor’s cash after debt or tax.
Assumptions and limitations
NOI definitions must be consistent. Debt service, depreciation, income tax and investor-specific financing are normally outside NOI; capital reserves and management assumptions vary by analysis. Cap rates also reflect property type, location, lease risk, growth expectations and market conditions, so this calculator does not determine a “correct” market cap rate.
Practical example and workflow
If annual NOI is 600,000 and price is 7.5 million, the cap rate is 8%. At the same 600,000 NOI, a 7.5% target cap rate implies a value of 8 million. That sensitivity makes it easy to see how pricing moves when required income yield changes.