Price a property from a target cap rate, or get the cap rate from value and income. Fill any two fields and the rest computes; there is no mode switch.
What the property is worth in the market. In the cap rate formula it is the price NOI is measured against: value equals NOI divided by cap rate.
All income the property collects in a year before any expenses: rent plus parking, laundry, storage, and other fees.
The recurring costs of running a property: property taxes, insurance, maintenance, utilities, and property management fees. Debt service, depreciation, capital expenditures, and income taxes are not operating expenses.
The share of rental income lost to empty units and turnover, expressed as a percent of potential rental income.
Effective gross income minus all operating expenses for one year. NOI excludes debt service, depreciation, capital expenditures, and income taxes.
Net operating income divided by property value, expressed as a percent. It states the unlevered annual return a property’s income produces at a given price.
The same 296,960 of net income, priced across a range of yields. The marker is your 5.71% rate.
$512,000 gross → $296,960 NOI
Illustrative calculation only. Not advice and not a valuation.
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One click sets every field.
The rest of this suite. Each answers one question.
Cap rate is short for capitalization rate. It tells you how much income a property throws off compared with what it costs to buy. The formula is: cap rate = net operating income divided by purchase price. You take the income the property keeps in a year after the cost of running it, called net operating income or NOI, then divide it by the price. A building that costs $900,000 and keeps $58,500 a year has a cap rate of 6.5%. It deliberately ignores any mortgage, so you can compare two buildings on their own merits rather than on who got the better loan. This calculator works both ways: give it the income and the price to get the rate, or give it the income and the rate you want to earn to get what the property is worth to you.
Plain-language definitions of every term this calculator uses.
Net operating income divided by property value, expressed as a percent. It states the unlevered annual return a property’s income produces at a given price.
Effective gross income minus all operating expenses for one year. NOI excludes debt service, depreciation, capital expenditures, and income taxes.
All income the property collects in a year before any expenses: rent plus parking, laundry, storage, and other fees.
The recurring costs of running a property: property taxes, insurance, maintenance, utilities, and property management fees. Debt service, depreciation, capital expenditures, and income taxes are not operating expenses.
The share of rental income lost to empty units and turnover, expressed as a percent of potential rental income.
Going-in uses today’s NOI and today’s price. Exit is the rate assumed at a future sale. Buyers underwrite exit rates above going-in rates to stay conservative.
What the property is worth in the market. In the cap rate formula it is the price NOI is measured against: value equals NOI divided by cap rate.