Cap Rate
Calculator
Analyze your rental property's return potential with our comprehensive cap rate calculator.
Understanding Cap Rate
Cap rate (capitalization rate) measures the expected annual return on a real estate investment property. It's calculated as Net Operating Income divided by the purchase price, expressed as a percentage.
Why Cap Rate Matters for Investors
Calculate Your Cap Rate
Property Tax: $300/mo
Insurance: $200/mo
Repairs: 8%
Management: 8%
Vacancy: 8%
HOA: $0/mo
Your Cap Rate Analysis
Cap Rate %
6.48%
Quality Rating
Good
Annual NOI
$25,920
Annual Operating Expenses
$12,720
Your cap rate updates live as you adjust the inputs. The lighter bars mark illustrative fair (~5%) and good (~7%) benchmarks for context — actual returns depend on the specific property and market.
Cap Rate Benchmarks
- →Below 4%: Low risk, stable cash flow, competitive market pricing
- →4-6%: Fair market return, typical for stable properties
- →6-8%: Good return, value-add opportunity or emerging market
- →Above 8%: Excellent return, requires careful due diligence
Using Cap Rate Effectively
- ✓Compare Markets: Use to compare properties across different areas
- ✓Predict Cash Flow: Estimate income potential before purchase
- ✓Evaluate Strategy: Assess if value-add strategies are needed
- ✓Negotiate Better: Justify offers based on market cap rates
💡 Pro Tip
Cap rate doesn't account for financing costs or appreciation. For a complete picture, calculate your cash-on-cash return (actual cash profit divided by cash invested). A 6% cap rate property might deliver 12% CoC return with 50% LTV financing and 3% annual appreciation.
Why Investors Choose Us
Fund properties at any cap rate with flexible programs and competitive rates.
95%
Application Approval Rate
75%
Max LTV Available
3-5 Days
Rate Commitment
Cap Rate Examples & Market Analysis
Conservative Market
Purchase Price
$300K
Monthly Rent
$2,200
Cap Rate
8.8%
Annual NOI
$26,400
Emerging market, strong fundamentals
Mid-Range Market
Purchase Price
$500K
Monthly Rent
$3,500
Cap Rate
7.2%
Annual NOI
$36,000
Established area, stable tenants
Premium Market
Purchase Price
$800K
Monthly Rent
$4,800
Cap Rate
5.6%
Annual NOI
$44,800
High-demand urban center
Ready to Finance Your Rental Portfolio?
Fund rental properties at any cap rate with rates starting at 6.5% and LTVs up to 75% on qualified properties.
Get Pre-Qualified in Minutes
Our specialists review applications in minutes. No income documentation required. Closing in as little as 3 weeks.
- ✓ Pre-qualified in minutes
- ✓ No income documentation
- ✓ Closing in as little as 3 weeks
- ✓ Competitive rates for qualified borrowers
5-minute application • Commercial Lending by New City Financial