The capitalization rate is annual net operating income divided by property value, expressed as a percentage. It estimates the unleveraged annual return on a real estate investment.

What is a good cap rate?

It varies by market and risk, but many investors target 4–10%. A higher cap rate usually means higher potential return and higher risk.

Does this include my mortgage?

No — cap rate uses net operating income before financing costs, so it measures the property itself rather than your loan terms.

Cap Rate Calculator

Capitalization rate from NOI and property value.

Cap rate calculator

The capitalization rate measures a property’s unleveraged return: annual net operating income (NOI) divided by its value. It lets you compare investment properties on a like-for-like basis, independent of how they are financed.

Enter the NOI and property value to get the cap rate instantly — all calculations stay in your browser.