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Cap Rate Calculator

Trying to evaluate how profitable a rental property really is? The Cap Rate Calculator helps you determine the capitalization rate of an investment property based on its income and market value—so you can quickly compare potential deals and make informed real estate investment decisions.



Cap Rate Calculator

Cap Rate Result

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What is Cap Rate Calculator

A Cap Rate Calculator is a real estate investment tool used to measure the expected return on a rental property, independent of how the property is financed. “Cap rate” (short for capitalization rate) is a commonly used metric that compares a property’s net operating income (NOI) to its current market value or purchase price.

This tool is essential for investors who want a fast, reliable way to assess the income-generating potential of a property. It helps you answer questions like: “Is this property priced fairly based on its income?” or “Which of these two rental properties offers better value?” The higher the cap rate, the better the potential return—though it may also signal higher risk, depending on the market.




How it works

Cap Rate Calculator Works

To use the Cap Rate Calculator, you enter two main inputs: the property’s net operating income (NOI) and either the purchase price or the current market value. The calculator divides the annual NOI by the property value and expresses the result as a percentage. This is your capitalization rate.

For example, if a property generates ₹5,00,000 in annual net income and is worth ₹50,00,000, the cap rate would be 10%. This figure allows you to compare investment properties regardless of their size or cost. It’s a useful screening tool before diving deeper into full ROI or cash flow analysis. Keep in mind: while cap rate offers a quick snapshot, it doesn’t account for financing, tax benefits, or property appreciation



Frequently Asked Questions

What is a good cap rate for rental properties Toggle
It depends on the market. In stable urban areas, 4%–6% may be acceptable. In riskier or emerging markets, investors often look for 8%–10% or more.
Does the cap rate include mortgage costs Toggle
No. Cap rate is based purely on property performance (income vs. value) and does not factor in financing or mortgage payments.
How do I calculate net operating income (NOI) Toggle
NOI = Gross Rental Income – Operating Expenses (excluding mortgage). This includes taxes, insurance, maintenance, and management fees.
Can cap rate help compare different property types Toggle
Yes, it’s a great way to compare properties of different sizes and price points—just ensure all income and expense data is consistent.
Is a higher cap rate always better Toggle
Not always. A higher cap rate might indicate higher risk, such as location issues or unstable rental income. Always consider the context.