Cap rate is the fastest way to compare income properties: annual net operating income divided by price. Enter the numbers and the calculator handles the rest, including vacancy. Everything runs in your browser.
Cap rate calculator
Operating expenses exclude mortgage payments. Cap rate describes the property, not your financing.
Reading a cap rate
A higher cap rate means more income per dollar of price, and usually more risk or work. Stabilised properties in strong markets trade at low caps; properties with problems trade at high ones. The number is most useful comparatively: against similar buildings on similar streets, not against a universal benchmark.
Common questions
Why exclude the mortgage? Because financing is about the buyer, not the building. Two investors with different loans still face the same property performance, which is what cap rate isolates.
What belongs in operating expenses? Taxes, insurance, management, maintenance, utilities you pay, and reserves. Leaving out reserves is the most common way listings overstate a cap rate, which makes this calculator a polite fact-checker.