Cap Rate Calculator – Free & Easy, Plus Reverse Formula

🏢 ➜ 📊

Cap Rate Calculator

Calculate cap rate instantly from NOI and property price — or work backwards: enter your target cap rate and solve for the maximum price you should pay. The cap rate formula explained step by step, with a full breakdown sheet. Free, instant, 100% private.

✓ Forward + Reverse Modes · ✓ Step-by-Step Breakdown

📊 Capitalization Rate Calculator

🔧 JS ⏳ · Input — · Result — · Engine ⏳

Net Operating Income (NOI) — yearly, $

Property Price or Value — $

💡 NOI = gross rental income − operating expenses (taxes, insurance, maintenance, management, vacancies) — before loan payments.

Net Operating Income (NOI) — yearly, $

Target Cap Rate — %

💡 Answers: "At a 6% cap rate, what's the most I should pay for a property earning $48,000 NOI?" — Price = NOI ÷ Cap Rate.

—

CAP RATE

—

NOI

—

Price

—

Monthly NOI

---

🧮 Step-by-Step Breakdown

How to Calculate Cap Rate — The Cap Rate Formula

Cap Rate = Net Operating Income ÷ Property Value × 100

Example: a building earning $48,000 NOI, priced at $800,000: 48,000 ÷ 800,000 × 100 = 6.0% cap rate. To calculate cap rate on any property, you need just these two numbers — the property's yearly net operating income and its price. The reverse formula: Value = NOI ÷ Cap Rate — how our calculator's second mode works, and how cap rate commercial real estate professionals price deals daily.

Why Use This Cap Rate Calculator?

📊

Instant Answer

Results update as you type — no calculate button, no waiting, no signup wall.

🔄

Reverse Mode

Solve for maximum purchase price from a target cap rate — the mode other calculators skip.

🧮

Step-by-Step Math

Every calculation shows its full breakdown — learn the formula while you use it.

🏢

CRE-Ready

Built for cap rate commercial real estate analysis — duplexes to apartment blocks.

🔒

100% Private

Deal numbers stay in your browser. Nothing is sent, stored, or logged anywhere.

♾️

Unlimited & Free

Run as many scenarios as you want — compare ten properties in a minute.

Popular Use Cases

• 🏠 Compare rental properties side by side — which deal earns a better return?
• 💼 Analyze cap rate commercial real estate listings — offices, retail, multifamily
• 💰 Set your walk-away price before making an offer (reverse mode)
• 📉 Track how a rent increase moves your cap rate year over year
• 🏦 Prepare numbers for lender meetings and investment memos
• 🎓 Learn real estate investing — see the formula work with real dollars

Pro Tips — How to Figure Out Cap Rate Like a Pro

• Never use gross rent: cap rate uses NOI (after expenses). Using gross inflates the number and the risk — most beginner mistakes live here.
• Exclude the mortgage: NOI is before debt service. That's the point — cap rate measures the property itself, independent of financing.
• Know your market's range: cap rates run ~4–5% in prime cities, 6–8% in secondary markets, 8%+ where risk (or opportunity) is higher. A "good" cap rate is relative to location and asset class.
• Higher cap ≠ always better: an 8% cap in a declining area can lose to a 5% cap where rents grow 4% a year. Cap rate is a snapshot, not the whole movie.
• Pair with cash-on-cash: after you calculate cap rate, run financing numbers too — levered returns tell the full investment story.

Frequently Asked Questions

A free tool that calculates a property's capitalization rate from its net operating income and price — and can also work in reverse, solving for the maximum price you should pay given a target cap rate. It runs entirely in your browser with step-by-step math shown for every result.

Divide the property's net operating income (NOI) by its purchase price or current value, then multiply by 100. For example: $48,000 NOI ÷ $800,000 price = 0.06 × 100 = a 6% cap rate. The calculator above does this instantly and shows every step.

Cap rate is calculated by dividing net operating income by property value. NOI equals all rental revenue minus operating expenses — taxes, insurance, maintenance, management fees, and vacancy allowance — before any mortgage payments. The result is expressed as a percentage.

You don't — and that's intentional. Cap rate deliberately excludes financing so investors can compare properties on an equal, all-cash basis. Your loan payment affects cash-on-cash return, not cap rate. Calculate NOI first, then divide by price; ignore the mortgage entirely.

The capitalization rate is a property's net operating income expressed as a percentage of its value — effectively the property's unlevered annual yield. A 6% cap rate means the building earns 6% of its price each year, before financing. Investors use it to value property, compare markets, and judge risk.

For cap rate commercial real estate analysis, typical ranges are 4–5% for prime stabilized assets (Class A offices, multifamily in major cities), 6–8% for suburban and secondary-market properties, and 8%+ for value-add or higher-risk deals. "Good" depends on your strategy: income stability favors lower caps, growth plays justify higher ones.

Cap rate measures the property's unlevered yield — NOI ÷ value, ignoring financing. ROI (or cash-on-cash) measures your personal return including the mortgage, based on cash invested. A property can have a modest 5% cap rate but a 12% cash-on-cash return with good leverage.

Yes — that's Reverse mode. Enter the property's NOI and your target cap rate (say 6.5%), and it computes the maximum price: $48,000 ÷ 6.5% = about $738,462. Offer above that and you're accepting a lower yield than you wanted.