Cap Rate Calculator
What return does a property produce before financing? Enter the price, gross rent, a vacancy allowance and operating expenses, and this tool returns the net operating income and the cap rate. Enter a target cap rate instead and it returns the price that rate implies. Nothing you enter is stored.
Last updated August 30, 2026
How it works
Cap rate is net operating income divided by price. Net operating income is the rent you actually collect after a vacancy allowance, minus operating expenses like taxes, insurance, utilities, maintenance and management. It deliberately excludes the mortgage, because the cap rate measures the property itself, not how you financed it. Run it in reverse and a target cap rate plus the net operating income gives you the price that would deliver that return.
A worked example
A property is priced at $1,000,000, brings in $100,000 of gross rent, and you allow 5 percent for vacancy and $30,000 for operating expenses. Effective gross income is $95,000, net operating income is $65,000, and the cap rate is 6.5 percent. If you wanted a 6 percent cap rate on that same income, you would need to pay no more than about $1,083,000.
What the cap rate is good for
Cap rate is a quick, financing-free way to compare properties and to sanity-check a price against the income. A lower cap rate means you are paying more for each dollar of income, often because the market expects growth or sees less risk. It says nothing about your actual cash flow once a mortgage is involved, which is what the rental cash flow calculator is for.
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Frequently asked questions
Does the cap rate include the mortgage?
No, and that is deliberate. Cap rate measures the property's income against its price, independent of how you finance it, so two buyers with different loans can compare the same property on the same basis.
What is net operating income?
The rent you actually collect after a vacancy allowance, minus operating expenses such as taxes, insurance, utilities, maintenance and management. It excludes mortgage payments and capital costs.
Is a higher or lower cap rate better?
It depends on your goal. A higher cap rate means more income per dollar of price, often with more risk or less expected growth. A lower cap rate usually reflects a safer or higher-growth market. Neither is simply good or bad.
Is my data stored?
No. The calculation runs entirely in your browser. Nothing you enter is saved or sent anywhere.