Calculators › Cap Rate Calculator
Deal analysisCapitalization rate measures a property's return from its income alone, with financing set aside entirely. Enter your numbers and see net operating income and cap rate together. It updates as you type.
Your property
Taxes, insurance, maintenance, management. Do not include the mortgage.
Cap rate is a snapshot from one property's income, not a return you'll personally earn if you finance the purchase. Not financial advice.
Cap rate is deliberately unlevered. It measures what the property itself produces, so you can compare an all-cash deal against a heavily financed one on equal footing. Your actual cash return, once a loan is involved, is a different number, cash-on-cash return, which layers your financing on top of this figure. Vacancy comes off the top because empty months are a real, expected cost of doing business, not an operating expense you can control the same way as, say, insurance.
On a $300,000 property renting for $2,000 a month, with 5% vacancy and $8,000 of annual operating expenses, effective gross income is $22,800, and NOI comes to $14,800. Divided by the $300,000 value, that's a 4.93% cap rate.
It depends heavily on the market, property type, and risk you're taking on. We cover this in detail in what is a good cap rate.
Cap rate ignores financing entirely. Cash-on-cash return measures your actual cash flow against the cash you put in, mortgage included. See cash-on-cash vs cap rate vs ROI.
Yes. Most analysts apply a vacancy allowance to gross rent before calculating NOI, since a unit that sits empty part of the year is a normal cost of doing business, not a one-off event.
Purchase price when screening a deal to buy. Current market value when checking how a property you already own is performing.
Ready Utilities was founded by Cedrick Reese, a retired veteran and web developer who enjoys building free, user-friendly online tools that simplify everyday tasks. My journey began in the early 2000s with affiliate marketing and niche site development, which grew into a passion for creating practical digital utilities and calculators. After retiring, I earned a Computer Systems Technician certificate from UEI College, completed Electro-Mechanical Technologies at Tulsa Welding School, and finished the Carpentry program at Florida State College at Jacksonville. Today, I combine my technical background and craftsmanship by building furniture using traditional woodworking methods, gardening, and developing helpful online tools for users worldwide.