Cap Rate Calculator for Rental Properties
Cap rate shows how much income a property produces compared with its price, no matter how you finance it. Change any number and the result updates as you type.
Save your assumptions and compare five properties.
The Deal Analyzer adds financing, cash flow, return metrics, a 10-year projection and a side-by-side deal comparison to your next review.
Digital spreadsheet · Excel .xlsx · Google Sheets import · Sold through Etsy
Preview the worksheets →How to calculate cap rate
Cap rate = net operating income ÷ purchase price
Net operating income (NOI) is your rent after vacancy, minus operating costs like property taxes, insurance, maintenance and management. It does not include your mortgage payment. That is why cap rate lets you compare properties fairly even when each buyer uses a different loan.
With the numbers filled in, NOI is about $19,500 a year on a $250,000 property, which is a 7.8% cap rate.
What is a good cap rate?
It depends on the market and the kind of property. Lower cap rates usually go with higher prices and lower perceived risk. Higher cap rates mean more income for each dollar spent, but often a weaker area or more risk. Compare a deal with similar properties nearby, not with a national number.
Using the target cap rate
Enter the cap rate buyers in your area expect and the calculator shows the price that income would support. Use it as a sanity check on an asking price. It is only as good as the NOI behind it, so be honest about vacancy and repairs.
What cap rate leaves out
- Financing, since it ignores your loan
- Appreciation
- Large one-time repairs like a roof or HVAC
- Income taxes
Frequently asked questions
Does cap rate include the mortgage?
No. Cap rate looks at the property alone. For the effect of your loan, use cash-on-cash return.
Should I use the purchase price or current value?
Use the price you would pay when you are evaluating a purchase. Use market value when you are checking a property you already own.
What is the difference between cap rate and cash-on-cash return?
Cap rate ignores financing. Cash-on-cash return shows what you earn on the cash you put in after paying the loan. Read Cap Rate vs. Cash-on-Cash Return for more.
Keep reading: Cash-on-Cash Return Calculator, Rental Cash Flow Calculator, 7 Rental Property Metrics.
Run the full numbers
The Rental Property Deal Analyzer works out cap rate, cash-on-cash, DSCR and a 10-year projection for up to five deals side by side, in Excel and Google Sheets.
Get the Deal Analyzer on EtsyEducational tool only. Not legal, tax or financial advice. Results depend on the numbers you enter.
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