Cap Rate Calculator
Calculate capitalization rate from rent, vacancy, operating expenses, and property value. Reverse-solve the value that fits a target cap rate.
Last updated: 2026-03-27
Cap rate calculator
Enter your values
Estimate NOI, cap rate, and a target value from a few core property assumptions.
Cap Rate
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Enter rent, expenses, vacancy, property value, and a target cap rate to estimate NOI and yield.
Calculation History(0)
Example calculations
Tap an example to prefill the calculator with sample values.
Small rental baseline
$36k rent, $9k expenses, $350k value
A simple hold property where cap rate is being compared against a market benchmark.
Result: A high-7% cap rate clears a 6% target fairly comfortably if the rent and expense assumptions hold.
Conservative market
Lower vacancy and a 5.25% target
Useful when you are checking how much value a lower-yielding market might justify.
Result: Reverse-solving value helps show what price still fits the target return band.
Expense-heavy property
Higher opex on a lower-value deal
Good for seeing how quickly weak NOI compresses yield even when the purchase price looks cheaper at first glance.
Result: The cap rate can look thinner than expected once vacancy and operating drag are included.
How the cap rate is calculated
The calculator applies your vacancy allowance to annual gross rent to estimate effective gross income. It then subtracts operating expenses to produce net operating income, or NOI, which is the income stream cap rate uses.
Cap rate is NOI divided by property value. The reverse-solve view simply divides the same NOI by your target cap rate so you can see what valuation would align with that yield target.
Cap rate FAQs
Use cap rate for property-level yield, then add financing and tax assumptions separately.
What expenses belong in cap rate?
Cap rate uses operating expenses that affect net operating income, such as taxes, insurance, repairs, management, and reserves. Mortgage payments are not part of NOI because cap rate is meant to measure the property before financing.
Why include a vacancy allowance?
Because scheduled rent and collected rent are not always the same. A vacancy allowance keeps the yield estimate closer to reality, especially when turnover or under-collection is common in the market.
What does the target value result mean?
It is the property value implied by your target cap rate given the modeled NOI. If your target cap rate is higher than the market, the implied value will be lower, and vice versa.
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Investment-planning note
This calculator is a screening tool, not underwriting advice. Taxes, capital expenditures, financing, market rent risk, and local comps can change the real return materially.