Cap Rate Calculator
Calculate the capitalization rate for your investment property to evaluate potential returns.
Understanding Cap Rate in Real Estate
What is Cap Rate?
The capitalization rate (cap rate) is a key metric in real estate investment that measures a property's potential return on investment. It's calculated by dividing the net operating income (NOI) by the property's current market value.
Formula and Calculation
Cap Rate = (Net Operating Income / Property Value) × 100%
Where:
- Net Operating Income = Annual Gross Income - Annual Operating Expenses
- Property Value = Current market value or purchase price