Calculator

Cap rate

What the income actually returns. Cap rate is net operating income divided by property value. Mortgage payments stay out of it.

Property value

The price you would pay, or the value you are testing.

Property value$

Use a known NOI, or build it from gross income, vacancy, and costs.

Gross incomeRent and similar, per year$Other incomeParking, laundry, fees$VacancyEmpty time, including a short season%

Operating expenses

ExpensesShare of income after vacancy%

Optional. Debt changes cash-on-cash. It does not change the cap rate.

Off. Results stay unlevered, which is what a cap rate is for.

1. Effective incomeGross income after vacancy, plus other income. A short season belongs in vacancy.
2. Net operating incomeEffective income minus operating costs. Leave out the mortgage, depreciation, and income tax.
3. Cap rateNOI divided by property value. To price a deal the other way, value equals NOI divided by your target cap rate.