Capitalization Rate (Cap Rate) Calculator

Real Estate Tools

Calculate the capitalization rate for rental properties with realistic expense data, vacancy allowances, and operating costs. Essential for comparing investment properties and estimating yields.

Calculate Cap Rate

Enter property details including realistic expenses and vacancy rates

Property Value ($)

Annual Gross Rental Income ($)

Vacancy Rate (%)

Percentage of time property is vacant

Annual Operating Expenses ($)

Maintenance, property management, taxes, insurance

Cap Rate Formula

Cap Rate = (NOI ÷ Property Value) × 100

NOI = Effective Gross Income - Operating Expenses

Effective Gross Income = Gross Income × (1 - Vacancy Rate)

Cap Rate Ranges

2-4%: Low risk, stable properties

5-8%: Typical market range

8-12%: Higher risk, value-add opportunities

12%+: High risk, potentially distressed

Why Realistic Data Matters

Includes vacancy allowances

Accounts for all expenses: Maintenance, management fees

Localized data: Use market-specific rates

Accurate comparisons: Essential for investment decisions