Cap Rate Calculator
Estimate the capitalization rate of a rental property from its net operating income and market value.
Your numbers
Annual rent minus operating expenses such as management, insurance, tax and maintenance. Exclude mortgage payments.
The current market value or purchase price of the property.
Used to compare gross rent yield against the cap rate.
Capitalization rate
7.20%
good yield band
The maths
Cap rate as a percentage of property value
Gross rent yield comparison
What this means
7.20% cap rate — good yield
A cap rate between 6% and 8% is generally considered healthy for many residential rental markets.
Valuation in years of income
The property value is roughly 13.9 times the annual net operating income entered.
Gross rent yield
Before expenses, the annual rent is about 9.60% of the property value. Net operating income is lower because it already subtracts operating costs.
Track this property's real performance
Save your rent and operating costs and follow the actual cap rate and cash flow month by month.
Track This PropertyNo card needed. Your calculator numbers carry over to your first property.
Propertira provides estimates based on the information you enter. Results are for informational purposes only and are not financial, tax, legal or investment advice.
How cap rate works
Cap rate is a quick way to express how much income a property produces relative to its price. It is useful when comparing several properties, because a higher percentage means more income for the same value — though it often comes with more risk or a less desirable location.
The cap rate does not include the mortgage. That is deliberate: it describes the property, not your financing. To see what actually lands in your bank account, use the cash flow calculator.
What counts as net operating income?
Net operating income is the rent you collect in a year minus the operating costs you pay to keep the property running: management, insurance, property tax, service charges, utilities you cover, and a maintenance allowance. It does not include the mortgage payment, capital improvements, or personal tax.
What this calculator does not do
It does not predict future prices, financing costs, or tax outcomes. It simply turns the net operating income and value you enter into a cap rate. Use it as one input among many when evaluating a property.
Good to know
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