Cap rate (capitalization rate) is the quickest way to compare a rental property's return against its price, before financing is factored in. Enter the numbers below to get yours.
How cap rate is calculated
Cap Rate = (Net Operating Income ÷ Property Value) × 100. Net Operating Income is your annual rental income minus annual operating expenses — before mortgage payments, since cap rate is meant to compare properties independent of how they're financed. Most investors look for cap rates in the 4-10% range depending on market and property type; there's no single "good" number across every market.
Related
- Free Property Management Software for Landlords
- Baselane Review (financial tracking for landlords)
- Which Property Management Software Is Right for You?