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.

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.

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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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