Cap Rate - Value

This calculates the value (sale price) of an income property. Enter the net operating income (NOI). Enter the capitalization rate (cap rate) as a percentage (number only).

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

Example

Fill in the amount of NOI (net operating income – e.g., 93197) by clicking on the green rectangle, typing the numbers, and then striking the ENTER key.

Fill in the cap rate (e.g., 8.7) by clicking on the green rectangle, typing the numbers, and then striking the ENTER key.

The calculator automatically calculates your answer (e.g., $1,071,230) which appears in the white rectangle. You can make changes by repeating the procedure.

Formula:   NOI ÷ cap rate = value

Another Example

To determine value, you find out what rate of return real estate investors expect to get in your market. Let's say your research shows that investors currently believe they will get an 8.3% rate of return on their real estate investments in the first year after they purchase an income property. (Their recent purchases provide evidence of this expectation.)

Next determine what the NOI of the property is (scheduled rent less vacancy and operating expenses). Let's say the property is estimated to have an NOI of $33,901 in the next year.

The NOI divided by the cap rate will provide you the estimated value of the income property. In this case, the value is $408,446.

Try it on the calculator above.