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Cap Rate Calculator

Updated June 2026 · By the NumberBench editorial team · How we calculate

Find a rental property’s capitalization rate and net operating income — then see how it stacks up against the typical 4–8% market band.

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Cap rate—
Net operating income / yr—
NOI / month—
Gross rent yield—

Cap rate vs market band

How you compare

📊 Compare investment-property loan rates

Check it out

NOI first, then cap rate

Cap rate is net operating income divided by price. Because NOI excludes your mortgage, two investors paying cash and financing 80% see the same cap rate — which is exactly why it’s the standard yardstick for comparing deals. A 5–8% cap rate is a healthy range in many US markets; below ~4% usually signals an expensive, low-yield market, while double-digit caps often come with more risk or work.

How it’s calculated

Effective income = gross rent × (1 − vacancy). NOI = effective income − operating expenses. Cap rate = NOI ÷ price. Gross rent yield = gross rent ÷ price.

Results update as you type and are estimates, not professional advice — verify important decisions with a qualified professional.

Worked example

A $350,000 property renting for $33,000/yr at 5% vacancy with $9,000 of expenses produces ~$22,350 NOI — a 6.4% cap rate, comfortably in the healthy band.

Common mistakes

  • Leaving the mortgage in — cap rate is unlevered, so exclude principal and interest.
  • Forgetting vacancy and management, which quietly cut real NOI.
  • Comparing cap rates across very different markets as if they’re equivalent.

Where it is used

  • Comparing rental deals on a financing-neutral basis.
  • Estimating value: value ≈ NOI ÷ target cap rate.
  • Sanity-checking a listing’s “projected” returns.

Frequently asked questions

What is a good cap rate?

It depends on market and asset class, but US cap rates commonly fall in the 4–8% range. Lower can mean a pricier, lower-risk market; higher often means more risk or a secondary market.

Does cap rate include my mortgage?

No. Cap rate uses net operating income (NOI), which excludes financing. That makes it a clean way to compare properties regardless of how they're financed.

What expenses go into NOI?

Operating costs: taxes, insurance, management, maintenance, utilities you pay, and vacancy. It excludes mortgage principal and interest, capital expenditures, and depreciation.