Typically includes: property taxes, insurance, management fees, utilities (if paid by owner), repairs & maintenance. Excludes: mortgage principal & interest, income taxes, depreciation, capital expenditures.
Cap Rate Calculation Results
Input Summary:
Effective Gross Income:
Calculated Net Operating Income (NOI):
Net Operating Income (NOI) Used:
Property Value:
Calculated Cap Rate:
Understanding Your Cap Rate:
The Capitalization Rate (Cap Rate) helps estimate the potential rate of return on a real estate investment based on its current income-generating capacity.
A higher cap rate generally suggests a higher potential return on investment, but it may also indicate higher risk, a lower property value relative to income, or perhaps lower future growth prospects.
A lower cap rate often implies lower current returns but could indicate lower risk, a higher property value relative to income (possibly in a prime location), or greater expectations for future income growth or property appreciation.
Cap rates are most useful for comparing similar types of properties in similar market conditions.
This calculation does not consider the effects of debt financing (leverage), income taxes, or future changes in income/expenses.
This tool is for informational purposes only and is not financial or investment advice.
