Cap Rate Calculator
Evaluate a property's yield independent of financing.
What it does
Divides Net Operating Income (NOI) by the property's value to produce a return percentage that is independent of how you finance the deal.
Why it matters
Cap rate lets you compare properties and markets on an apples-to-apples basis. It's the metric lenders, appraisers, and investors use as a universal benchmark.
How to Use
- 1Enter NOI: Annual gross rent minus operating expenses (taxes, insurance, maintenance, management, vacancy). Do NOT include mortgage payments.
- 2Enter property value: Use the purchase price or current market value depending on whether you're analyzing a new deal or an existing holding.
- 3Read result: Typical residential rental range is 5–10%. Higher is generally better, but verify the market and property condition.
Cap Rate Calculator
Cap Rate8.00%
Best Practices & Benchmarks
- •Use market-rate comps for NOI, not the seller's pro forma — sellers routinely project zero vacancy and understate maintenance.
- •Typical residential cap rates: 5–8% in primary markets, 7–10% in secondary/tertiary markets. A cap rate significantly above market often signals higher risk, not a great deal.
- •For acquisition analysis use purchase price; for portfolio valuation or refinance analysis use current market value.
- •Never include mortgage payments in NOI — cap rate is financing-independent by design.
- •Compare your target cap rate to the local market average; buying at or below market cap rate means you're paying a premium.
Want the full picture?
These calculators use your assumptions. Temelios pulls real comps and census data so your vacancy, rent, and expense inputs are grounded in reality.
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