Cap rate calculator

Free cap rate calculator: enter NOI and property value to get your capitalization rate in seconds, built for CRE investors sizing up sourcing targets.

Net Operating Income (NOI) — $

Annual income minus operating expenses, before debt service

Property Value / Purchase Price — $

Asking price for acquisitions; appraised value for portfolio review

Cap Rate (NOI / Property Value)

6.00%

A 6.00% unlevered yield — compare against comparable asset-class cap rates in your submarket.

Open in Deal Workbench

Cap Rate (NOI / Property Value)

6.00%

A 6.00% unlevered yield — compare against comparable asset-class cap rates in your submarket.

Beyond the calculator

Our recommended implementation for underwriting

This calculation is one step in a larger workflow. NextAutomation builds the underwriting workflow around the model your team already uses. It organizes the deal room, maps rent roll, T12 and lease inputs into your workbook and keeps a document and page reference beside each extracted field.

Workflow coveredInitial screening, pro forma and investment committee materials in one deal record.
Documents handledRent rolls, T12 operating statements, leases and offering memoranda in PDF, XLSX and DOCX.
Fit with your modelInputs map into your existing workbook. Your assumptions and calculation logic stay as they are.
Human reviewScans and uncertain extractions are flagged. Your team approves the assumptions and makes the decision.

See the underwriting workflow Read the investment committee memo case study

Where AI changes the answer

After you enter your NOI and value, this calculator returns the exact capitalization rate instantly — but cap rate alone never closes a deal. Where AI changes the answer: it can surface the implied market cap-rate RANGE for comparable asset classes and submarkets so you can sanity-check whether your number looks aggressive or conservative, and flag when a result rests on assumptions — in-place versus pro-forma NOI, trailing-12 versus forward income — that warrant sensitivity testing. Any market range shown is a labelled ESTIMATE, not a quote or appraisal: it is decision-support for your own underwriting, never a substitute for verified comparable sales or a full underwrite.

Questions real estate teams ask

What is a cap rate and how do I calculate it?

Cap rate (capitalization rate) = Net Operating Income ÷ Property Value, expressed as a percentage. NOI is your effective gross income minus operating expenses — it excludes debt service, capital expenditures, and income taxes. For example, a property generating $120,000 in NOI priced at $2,000,000 has a 6% cap rate. A higher cap rate signals a higher unlevered yield and, usually, higher risk or a softer market; a lower cap rate signals a pricier, lower-risk asset.

What is a good cap rate for multifamily?

Cap rates vary significantly by market, asset class, and where you are in the interest-rate cycle. Class A multifamily in gateway markets generally traded around 4–5% in 2024–2025, while secondary markets and value-add Class B/C assets ranged roughly 5.5–7.5%. Those figures are ESTIMATES that move with rates, rent-growth expectations, and buyer demand — always verify against current comparable sales in your specific submarket before pricing a deal, because half a point of cap rate can swing value by hundreds of thousands of dollars.

How does cap rate differ from cash-on-cash return?

Cap rate is unlevered — it ignores financing and measures a property's income relative to its value, which makes it the standard yardstick for comparing assets and pricing acquisitions. Cash-on-cash return is levered — it measures the actual pre-tax cash flow you collect relative to the equity you invested, after debt service. Both matter: use cap rate to judge whether the asset is priced right, and cash-on-cash to judge whether your specific financing and equity structure produces the return you need.

Should I use in-place or pro-forma NOI in a cap rate?

Both, deliberately. The in-place (trailing-12) cap rate tells you what the asset yields today on actual income; the pro-forma cap rate tells you what it could yield after your business plan — higher rents, lower vacancy, trimmed expenses. Sellers often quote the pro-forma number, which flatters the asking price. Run the cap rate on conservative in-place NOI first, then test your pro-forma assumptions separately so you know exactly how much of the return depends on execution versus what you are actually buying today.

Can I use this calculator for any property type?

Yes — cap rate applies to any income-producing property: multifamily, office, industrial, retail, self-storage, and more, and the formula is identical across types. What changes is the benchmark: a normal cap rate for stabilized industrial looks nothing like one for value-add retail. This calculator gives you the exact math for your inputs; any comparable cap-rate range it references is an ESTIMATE that should be validated against real transaction data for your asset class and submarket.

More free CRE tools

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Free noi calculator: enter effective gross income and operating expenses to compute net operating income — for CRE investors building accurate underwriting.
Cash on Cash Return Calculator for CRE
Free cash on cash return calculator: enter annual cash flow and cash invested to compute your equity yield — for CRE investors modeling levered returns.