Cap Rate Calculator (2026)
Cap rate is a property's annual net operating income (NOI) divided by its price or value. Enter any two of NOI, price and cap rate below and the calculator returns the third.
Updated 19 October 2026
What do you want to find?
| Cap rate | Indicated value | Change |
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Don't have the NOI? Build it from income and expenses
This is arithmetic on the numbers you enter. It does not check them. If the NOI is wrong, so is the cap rate.
The cap rate formula
Cap rate is one year of net income as a share of what the property costs. It works in three directions, and the calculator above does all of them:
Value = NOI ÷ cap rate
NOI = price × cap rate
NOI is rental and other income, less vacancy and credit loss, less operating expenses. Debt service, depreciation and income taxes are not in it, which is why a cap rate is the same whether the buyer pays cash or borrows. It is a yield on the whole price for the first year, before growth, before capital spending and before the sale.
Worked example
A multifamily building has gross potential rent of $1,000,000 a year. Vacancy and credit loss run 5% of rent, which is $50,000. Other income is $20,000. Operating expenses are $320,000.
- Effective income: $1,000,000 − $50,000 + $20,000 = $970,000
- NOI: $970,000 − $320,000 = $650,000
- Asking price $10,000,000: cap rate = $650,000 ÷ $10,000,000 = 6.5%
Now run it the other way. A buyer who wants a 7% cap rate on the same NOI would pay $650,000 ÷ 0.07 = $9,285,714, which is 7.1% below the asking price. At 6% the same NOI supports $10,833,333, which is 8.3% above it. A half-point move in the rate moves the value by roughly 7% to 8% here, and the effect grows as the rate falls.
What to check before you trust a cap rate
- Which NOI. In-place, trailing 12 months and pro forma NOI give three different rates on one price. Ask which was used.
- What was deducted. Management fees, replacement reserves and leasing costs are deducted in some NOI figures and not in others. Two rates are comparable only when the NOI behind them is defined the same way.
- Which price. The rate on the contract price is not the rate on the price plus closing costs and renovation spend. The second is a yield on cost.
- What it ignores. A cap rate says nothing about lease length, the capital a building needs or the cost of debt. Two buildings at one rate can be very different investments. For the longer explanation, see what a cap rate is and how interest rates affect cap rates.
What this calculator does not replace
It does not replace a licensed appraisal. Where a lender, a court or a tax authority needs a value, that is the work of a licensed appraiser. It does not replace a title search, a lease audit or a physical inspection, which are what tell you whether the NOI you entered is real. It does not replace a levered return analysis: DSCR, cash-on-cash return and IRR need the loan terms, the hold period and an exit assumption, none of which a cap rate contains. And it does not choose the cap rate for you. The rate that fits a given building comes from comparable sales and the market, not from a formula.
The calculator takes your NOI. Titleman builds it.
Start from an address. Titleman returns a value opinion with the comp set, the cap rate and the confidence stated, and every figure traced to its source or formula, with gaps named rather than filled. Add the rent roll and T-12 and it checks them against each other and the market. A run takes about 40 minutes at the median. A professional on your team reviews it, and it is not an appraisal.
See how a value opinion is built Request a demoQuestions and answers
How do you calculate cap rate?
Divide the property's annual net operating income (NOI) by its price or value. A building with $650,000 of NOI that sells for $10,000,000 has a cap rate of 6.5%. NOI is income after vacancy and operating expenses, before debt service, depreciation and income taxes.
What is the cap rate formula?
Cap rate = NOI ÷ price. Rearranged, value = NOI ÷ cap rate, and NOI = price × cap rate. NOI is one year of rental and other income less vacancy and operating expenses. Mortgage payments are not part of it.
How do I find a property's value from NOI and a cap rate?
Divide the NOI by the cap rate written as a decimal. With $650,000 of NOI and a 7% cap rate, the indicated value is $650,000 ÷ 0.07 = $9,285,714. At 6% the same NOI indicates $10,833,333, so a one-point difference in the rate is worth about $1.5 million on this building.
What is a good cap rate?
There is no single good number. A lower rate reflects lower perceived risk and a higher price for each dollar of income; a higher rate reflects more risk or less certain income. Compare a rate only with similar assets in the same market, and only when the NOI behind each rate is defined the same way.
Does cap rate include the mortgage?
No. A cap rate is an unlevered, one-year income yield on the whole price. Debt service is left out, so the rate is the same whether the buyer pays cash or borrows. Levered measures such as cash-on-cash return or IRR bring the financing in.
What goes into NOI for a cap rate?
Rental income and other income, less vacancy and credit loss, less operating expenses such as property taxes, insurance, management, repairs and utilities. Debt service, depreciation, income taxes and usually capital expenditures are excluded. Ask whether reserves and leasing costs were deducted, because the same price gives a different cap rate if they were.
More from Titleman
- What is a cap rate in commercial real estate?
- How do interest rates affect cap rates?
- Pro forma vs in-place NOI
- How many analyst hours does a deal eat? Calculator
Titleman is an AI real estate engine for US commercial real estate firms. It is not a broker, appraiser or law firm; outputs are drafts for a licensed professional to review and sign. This calculator does arithmetic on the numbers you enter and is not a valuation, an appraisal or investment advice.