Compare two rental-property candidates
A cap-rate view can make it easier to compare properties with different prices and income levels before deeper underwriting.
Money Tools
Cap Rate Calculator
Estimate capitalization rate from annual net operating income and property value.
Why this page exists
Rental-property screening gets easier when income and value assumptions are turned into a simple cap-rate estimate instead of being compared only in raw dollars. This calculator helps visitors estimate capitalization rate from annual net operating income and property value or purchase price.
Interactive tool
Run the estimate
Enter your numbers and read the result first, then use the sections below to understand what affects the outcome.
Calculator
Cap rate calculator
Estimate capitalization rate from annual net operating income and property value.
Result
6.00%
Estimated capitalization rate based on annual net operating income divided by property value.
Cap rate6.00%
NOI used$18,000.00
Property value used$300,000.00
Formula basisNOI รท property value
- $18,000.00 of annual NOI against $300,000.00 of property value works out to about 6.00% in cap rate.
- Cap rate is best used as a simple property-yield estimate rather than a full return calculation, because financing and capital costs are outside the formula.
- Use the result alongside rent, expense, and financing tools when comparing real-estate opportunities.
This is a simple real-estate yield estimate, not investment advice. Financing structure, future expenses, vacancies, and capital costs are not captured by cap rate alone.
Planning note
Last updated April 16, 2026. Use this tool to compare scenarios and plan ahead, then confirm important details with the lender, employer, insurer, contractor, or other qualified provider involved in the final decision.
How it works
What the calculator is doing
Enter annual net operating income and the property value or purchase price you want to compare it against.
The calculator divides annual NOI by property value to estimate cap rate.
It shows the cap rate percentage, the NOI used, and the property value used.
Understanding your result
This is a simple real-estate yield estimate only. It does not include financing, future capital expenses, vacancy swings, or tax effects, so it works best as an early comparison tool.
Browse more money toolsExamples
Ways people use this tool
Example scenarios help turn a quick estimate into a more useful comparison or planning step.
Test how price changes affect yield
Changing the property value can show how quickly cap rate moves when the same NOI is attached to a higher or lower purchase price.
Use it beside financing tools
Cap rate often becomes more useful when paired with mortgage, tax, and cash-on-cash return tools.
When to use it
Good times to run this calculator
Use this when you want a fast property-yield estimate before building a more detailed rental analysis.
It can also help when comparing asking prices against the same income assumption.
Assumptions and limitations
The estimate assumes the NOI number entered is realistic and already reflects normal operating expenses.
It does not include financing, tax structure, vacancy surprises, or major future capital spending.
Common mistakes
Avoid the usual input mistakes
Using gross rent instead of NOI can make cap rate look stronger than it really is.
Comparing cap rates without checking whether the same expense assumptions were used can lead to bad comparisons.
Practical tips
Run both a conservative and optimistic NOI case to see how sensitive the cap rate is to vacancy or expense changes.
Use the result beside payment and property-tax estimates before deciding a deal looks attractive.
Worked example
Walk through a realistic scenario
A worked example shows how the estimate behaves when the inputs resemble a real planning decision.
Estimate cap rate on a rental listing
A property shows $18,000 in annual NOI and a $300,000 price.
1. Enter $18,000 as annual net operating income.
2. Enter $300,000 as property value.
3. Divide NOI by value to get a 6% cap-rate estimate.
Takeaway: This gives a quick apples-to-apples yield estimate before looking at financing or future repairs.
FAQ
Common questions
How is cap rate calculated here?
The calculator divides annual net operating income by property value or purchase price and shows the result as a percentage.
Why does cap rate not tell the whole investment story?
Because it ignores financing structure, future repairs, reserves, appreciation, taxes, and timing of cash flows.
What should count as NOI?
NOI usually means property income after operating expenses but before debt service, income taxes, and large capital improvements.
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