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 acquisition targets.
Annual income minus operating expenses, before debt service
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.
Cap Rate (NOI / Property Value)
6.00%
A 6.00% unlevered yield — compare against comparable asset-class cap rates in your submarket.
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.
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