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🏢 Real Estate

Cap Rate Calculator

Calculate the Capitalization Rate for commercial and residential investment properties.

⚡ Instant 🆓 Free 🔒 Private
cap rate investment roi commercial property
Taxes, Insurance, Repairs, etc.

Understanding Cap Rate

Capitalization Rate, or Cap Rate, is one of the most critical metrics for real estate investors. It is used to estimate the potential return on an investment property.

  • Net Operating Income (NOI): The total annual income the property generates (after accounting for vacancy) minus all operating expenses.
  • Property Value: The current market value or purchase price of the property.

Formula: Cap Rate = (NOI / Property Value) × 100

A higher cap rate generally implies a higher potential return, but may also indicate higher risk.