Calculate a rental property's net operating income (NOI) and capitalization rate, plus its theoretical value at a target cap rate — computed instantly in your browser.
📂 Real Estate & Investing🏘️ Income
🧾 Operating expenses (annual)
🎯 Target valuation (optional)
Fill in the fields on the left with your own numbers, then press Calculate to see your result instantly. No sign-up required, and no data is sent anywhere.
The capitalization rate (cap rate) is one of the most widely used shorthand metrics in real estate investing because it strips away financing entirely and asks a simple question: relative to what the property is worth, how much net income does it actually produce in a year? This calculator builds that answer from the ground up — starting with gross rental income, applying a vacancy allowance to get effective income, subtracting every operating expense you list to arrive at net operating income (NOI), and finally dividing NOI by the property's value to produce the cap rate itself. Because financing costs are deliberately excluded from NOI, the resulting cap rate lets you compare very differently financed properties (or a property to itself before and after a cash purchase) on a level, purely operational basis.
A cap rate on its own is just a ratio — NOI divided by value — but the number only becomes meaningful once you place it next to comparable properties in the same market. A 5% cap rate might be entirely normal, even attractive, in a low-risk, high-demand city where investors accept lower yields in exchange for stability and appreciation potential; the same 5% in a higher-risk secondary market might signal an overpriced asset relative to what similar buildings are actually trading for. That's why this calculator's classification band is presented as a general reference only, never a verdict.
The target-cap-rate feature flips the usual calculation around, and it's often the more practically useful direction. Rather than starting from a known price and computing what cap rate it implies, you start from the property's actual NOI and ask: at what price would this income stream deliver the cap rate I consider acceptable for this type of deal? Dividing NOI by a target cap rate produces exactly that theoretical value — a fast sanity check against an asking price, though never a substitute for a formal appraisal, which accounts for comparable sales, physical condition, and factors a single ratio can't capture.
Two levers deserve special attention when working through the expense side: vacancy rate and management fee. Vacancy converts a landlord's optimistic "if it's always rented" assumption into something closer to a realistic annual average, while a management fee — calculated here as a percentage of effective income rather than a flat number — automatically scales with how well (or poorly) the property is actually performing. Getting these two assumptions right often matters more to the final cap rate than small differences in the purchase price itself.
There is no single universal answer — a "good" cap rate depends heavily on the country, city, property type, condition, and how much risk you're comfortable with. This calculator shows where your number falls on a commonly cited general scale, but always compare it against similar properties in the same specific market.
Cap rate measures NOI against the property's value, ignoring how the purchase was financed. Cash-on-cash return would instead measure annual cash flow against the actual cash you put in — this calculator focuses on cap rate and NOI, which work the same whether a purchase is all-cash or financed.
It lets you flip the formula around: instead of computing the cap rate for a known price, you can see what price a property with this NOI would need to sell at to hit a cap rate you consider acceptable — useful for sanity-checking an asking price.
No — it's a straightforward percentage reduction applied to gross income (for example, 5% vacancy reduces income by 5%), which is a common simplification for annual planning rather than a month-by-month vacancy schedule.
No, it's optional and defaults to 0%. Enter a percentage of effective income only if you pay (or plan to pay) a property manager; self-managed properties can safely leave it blank.