Cap Rate

This calculates the capitalization rate (cap rate) of an income property. Enter the value (sale price) of the real estate. Enter the net operating income (NOI).

Please do not use percentage or dollar characters or commas in the calculator.



Example

Fill in the NOI (scheduled rents less vacancy and expenses – e.g., 84561) by clicking on the green rectangle, typing the numbers, and striking the ENTER key.

Fill in the value (sale price – e.g., 949700) by clicking on the green rectangle, typing the numbers, and striking the ENTER key.

The calculator automatically calculates your answer (e.g., 8.9%) which appears in the yellow rectangle. You can make changes by repeating the procedure.

Formula:   NOI ÷ value = cap rate

Another Example

To determine the cap rate, you find out what the NOI for the next year was estimated to be at the time of the sale. Let's say your research shows that the NOI was estimated at $132,297.

Next find out what the sale price (value) of the property was. Let's say the property sold for $1,587,900.

The NOI divided by the value will provide you with the cap rate. In this case, the cap rate is 8.3%.

Try it on the calculator above.