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Cap rate calculator

Compute the capitalization rate of a rental property, and compare it with the market rate of your own comparable sales.

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Enter Property price or value, Monthly rent, Vacancy and unpaid rent (% of the year), Annual operating costs (excluding the loan), Market cap rate on comparable sales (%) and the Cap rate calculator works out Cap rate, Net operating income (yr), Value at the market rate, Spread vs market (basis points) straight away. For instance, with Property price or value = $400,000.00, Monthly rent = $2,000.00, Vacancy and unpaid rent (% of the year) = 5, Annual operating costs (excluding the loan) = $6,000.00 and Market cap rate on comparable sales (%) = 5 it returns Cap rate = 4.2%, Net operating income (yr) = $16,800.00 and Value at the market rate = $336,000.00.

How to use it

  1. Enter your values: Property price or value, Monthly rent, Vacancy and unpaid rent (% of the year), Annual operating costs (excluding the loan), Market cap rate on comparable sales (%).
  2. Read the result instantly: Cap rate, Net operating income (yr), Value at the market rate, Spread vs market (basis points).

Frequently asked questions

How does the Cap rate calculator work?

It takes Property price or value, Monthly rent, Vacancy and unpaid rent (% of the year), Annual operating costs (excluding the loan) and Market cap rate on comparable sales (%) and derives Cap rate, Net operating income (yr), Value at the market rate and Spread vs market (basis points) from them. The calculation is live as you type, so the result updates on every change.

Which values does the calculator ask for?

5 values: Property price or value ($), Monthly rent ($), Vacancy and unpaid rent (% of the year), Annual operating costs (excluding the loan) ($) and Market cap rate on comparable sales (%). Nothing else is required — no account, no file upload.

What does a typical calculation look like?

With Property price or value = $400,000.00, Monthly rent = $2,000.00, Vacancy and unpaid rent (% of the year) = 5, Annual operating costs (excluding the loan) = $6,000.00 and Market cap rate on comparable sales (%) = 5, the calculator returns Cap rate = 4.2%, Net operating income (yr) = $16,800.00 and Value at the market rate = $336,000.00. Those figures come from running this exact tool, so you can reproduce them by entering the same values.

How much does the result change with different inputs?

It moves a lot. Using Property price or value = $800,000.00, Monthly rent = $4,000.00, Vacancy and unpaid rent (% of the year) = 10, Annual operating costs (excluding the loan) = $12,000.00 and Market cap rate on comparable sales (%) = 5.5 instead, Cap rate goes from 4.2% to 3.9% — which is why it is worth testing a few scenarios rather than trusting a single figure.

What does it give for smaller values?

Scaled down to Property price or value = $200,000.00, Monthly rent = $1,000.00, Vacancy and unpaid rent (% of the year) = 2.5, Annual operating costs (excluding the loan) = $3,000.00 and Market cap rate on comparable sales (%) = 4.5, Cap rate comes out at 4.35%. The relationship is worth checking at both ends before you rely on a single result.

When would I actually use this?

Before making an offer: what the bank will lend, what the purchase costs on top of the price, and how much deposit closes the gap.

What is the most common mistake?

Budgeting for the price and forgetting the acquisition costs. Notary fees, transfer duty and registration add between 2% and 15% depending on the country — enough to sink an offer.

How accurate is it, and what are the limits?

Estimate only — not financial advice.

What is the difference between the Cap rate calculator and the Vacancy rate calculator?

This one returns Cap rate and Net operating income (yr); the Vacancy rate calculator returns Vacancy rate. That is the whole difference — open the one whose figure you need.

Is there a tool for the next step?

Amortization Calculator is the closest one after this: Compute your monthly mortgage payment and how it splits between interest and principal.

Further reading

All guides →
ExplainerWhat Is a Cap Rate, and What Counts as a Good OneCap rate is net operating income divided by price — a return that deliberately ignores your mortgage. Here is how to compute it, and why a high one is a warning as often as a bargain.How-toHow to Calculate Rental Cash Flow (And the Yield You Need to Break Even)Rent minus charges minus the loan. On an 80 percent mortgage at 3.5 percent over 25 years, a rental only breaks even from about 7.1 percent gross yield — here is the full calculation.ExplainerA Construction Loan Is Not a MortgageFunds arrive in stages and interest accrues only on what has been drawn. On a $400,000 facility at 8.5 percent over twelve months, that is $18,062.50 rather than the $34,000 the headline rate implies — 53.13 percent of it.ExplainerFinancing Land Is the Hardest Money to BorrowLarger deposit, shorter term, higher rate, and a balloon at year five. On the same $120,000 plot, the land loan costs $768.10 a month against a mortgage's $606.79 — and demands $18,000 more at closing.How-toHow to Read an Amortization ScheduleUnderstand an amortization schedule row by row: how each payment splits into principal and interest, and why early payments are mostly interest.How-toHow Much Down Payment Do You Need to Buy a Home?How to work out a down payment: typical percentages, the 20% PMI threshold in the US, and how the amount you put down changes your monthly payment.