Cap Rate Calculator

Q: What is a good cap rate?

It depends on the market and the risk. In many investor markets, cap rates between 5 and 8 percent are common for stabilized rentals; higher cap rates often signal higher risk or a softer location. Compare cap rates within the same market, not across very different ones.

Q: What is the difference between cap rate and cash-on-cash return?

Cap rate is unlevered: net operating income divided by purchase price, ignoring any loan. Cash-on-cash return divides your annual cash flow after debt service by the actual cash you put in, so it reflects your financing and down payment.

Q: What counts as operating expenses?

Property taxes, insurance, property management, maintenance, and reserves, plus any HOA. Operating expenses exclude your mortgage payment, which is why cap rate (which uses NOI) is independent of how the deal is financed.

Measure a rental's yield before you buy.

Purchase price$Monthly rent$Vacancy%Annual operating expenses$Down payment%Loan rate%Amortizationyrs

Cap rate

7.1%

3.8% cash-on-cash

Cap rate is the unlevered yield (NOI ÷ price). Cash-on-cash adds your financing and down payment.

Effective gross income$31,350

Net operating income (NOI)$22,150

Cash invested (down payment)$62,000

Monthly cash flow$196

Finance this rental

Inputs are pre-filled with example figures, edit them to match your deal. Estimates only, for planning purposes, and not a rate quote, an offer, or a commitment to lend. Your actual rate and terms depend on a full review of your deal.

Cap rate is the unlevered yield on a rental, net operating income divided by purchase price, and it is the quickest way to compare deals on an apples-to-apples basis. This calculator also factors in your financing to show monthly cash flow and cash-on-cash return.

Common questions

What is a good cap rate?

What is the difference between cap rate and cash-on-cash return?

What counts as operating expenses?

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