Cap Rate Calculator
Determine the capitalization rate of commercial and residential real estate investments instantly.
Free to start. No spreadsheets.
Investment Margin Protection Framework
What Cap Rate Does
Calculates the annual yield of an investment property assuming it is purchased entirely with cash, dividing Net Operating Income (NOI) by the Purchase Price.
Why Cap Rate Matters
Normalizes mortgage variables out of the equation so you can compare property performance across different geographical regions and neighborhoods.
Underwriting Action Strategy
Calculate Gross Revenue
Combine rental income and additional revenue streams like laundry or parking fees.
Deduct Net Expenses
Subtract vacancy allowances and operating costs to determine Net Operating Income (NOI).
Divide by Price
Divide NOI by purchase price to instantly output the property's Cap Rate percentage.
Most investors lose money here — avoid these mistakes:
- Confusing Cap Rate with Cash-on-Cash Return (which factors leverage).
- Excluding property management costs from NOI calculations.
- Buying low cap rate deals in high-risk areas without safety margins.
Example Scenario
Interactive Rental Projections
Analyze the deal. Understand the market. Make the right decision — with InvestorVI AI.
💡 Need More Insight?
You've got the numbers — now go deeper.
InvestorVI AI works alongside your analysis — helping you go deeper, validate your numbers, and make smarter investment decisions. Ask anything about your deal and get instant guidance.
"This tool gives you the numbers. InvestorVI AI helps you understand what to do with them."
Ask InvestorVI AI →InvestorVI AI can:
- Break down your deal in plain English
- Estimate risks and hidden costs
- Suggest offer strategies
- Answer real-world investing questions
Stop guessing your numbers.
Get your deal grade, max offer, and strategy — instantly.
Free to start. No spreadsheets.
No spreadsheets. No guesswork. Just clear investment decisions.
You can calculate this manually, or use our deal analyzer.