StatGardenREF. DESK
Calculators/Finance/Cap rate (capitalisation rate)
Finance

Cap rate (capitalisation rate) calculator

The unlevered return a rental property generates from its net operating income.

What this calculator does

Cap rate (capitalisation rate) works out the unlevered return a rental property generates from its net operating income. Enter your own figures above and the answer updates as you type: nothing is fixed in the code, so the result reflects exactly the numbers you supply.

The formula this calculator evaluates is printed under the tool and explained below, so you can check the working by hand or reuse it in a spreadsheet.

The formula

FormulaNOI = Gross rental income × (1 − expense ratio) × (1 − vacancy rate); Cap rate = NOI / property value

The inputs explained

FieldWhat to enter
Gross annual rental income ($)A number, measured in your currency. Starts at 36000.
Operating expenses (% of gross income)A number, measured in % of gross income. Starts at 30.
Vacancy rate (%)A number, measured in %. Starts at 5.
Property value / purchase price ($)A number, measured in your currency. Starts at 400000.
Target cap rate for comparison (%)A number, measured in %. Starts at 6.

Worked examples

Every figure in the tables below is produced by this page’s own calculator at build time, so the numbers and the tool always agree. Select any row to load that scenario.

How the answer changes with gross annual rental income

Every other input is held at the calculator’s starting values while gross annual rental income varies. Select any row to load that scenario into the calculator.

How the answer changes with gross annual rental income
Gross annual rental income ($)Cap rateNet operating incomeEffective gross income after vacancy
18,0002.99%$11,970.00$17,100.00
27,0004.49%$17,955.00$25,650.00
36,0005.99%$23,940.00$34,200.00
54,0008.98%$35,910.00$51,300.00
72,00012.0%$47,880.00$68,400.00
108,00018.0%$71,820.00$102,600.00