Cap rate calculator
A cap rate is a rental property's net operating income divided by its price, shown as a percent. Enter the price, the yearly income, a vacancy percentage and the yearly operating costs to get net operating income and the cap rate. Add a target cap rate to see the price it implies.
Your files
Leave empty to find a price from a target cap rate.
Before vacancy.
The share of the year the unit sits empty. Leave empty for 0.
Tax, insurance, repairs, management. Not the mortgage. Leave empty for 0.
Shows the price that would give this cap rate.
Results
Enter the yearly income and either a purchase price or a target cap rate to see your results.
Editable spreadsheet
Pro gives you this calculation as an Excel file with live formulas, so you can change a number and watch every result update. It opens in Excel and Google Sheets.
Get Pro for the Excel fileThese figures are estimates for planning. They are not financial, tax or investment advice. Working out a result is free and never counted. Saving the PDF counts as one of your free uses; Pro has no limit.
The formulas in words
- Vacancy loss = yearly income times the vacancy percentage.
- Income after vacancy = yearly income minus the vacancy loss.
- Net operating income = income after vacancy minus yearly operating costs. Mortgage payments are not included.
- Cap rate = net operating income divided by the purchase price.
- Price at a target cap rate = net operating income divided by the target cap rate.
What counts as net operating income?
Net operating income is what a property earns from rent and other income after vacancy and after the costs of running it. It is worked out before any loan payment and before income tax. It shows what the property earns on its own, so two properties can be compared whatever way each is financed.
Which costs go in and which stay out?
Put in what it costs to operate the property: property tax, insurance, repairs and upkeep, management fees, and any utilities or fees the owner pays. Leave out mortgage payments, income tax, depreciation and the money you spend to buy the property. Ask an accountant how your own costs should be counted.
Is a higher cap rate better?
Not always. A higher cap rate means more income for each dollar of price, but it often goes with more risk, such as an older building, weaker demand or a less certain income. There is no single right number. Compare similar properties in the same area, and ask a local adviser what fits you.
How is a cap rate different from cash-on-cash return?
A cap rate ignores the loan: it divides net operating income by the full price. Cash-on-cash return looks at what you actually receive after the loan payment, divided by the cash you put in. To see cash flow and cash-on-cash return for a purchase with a loan, use the rental property calculator.
Put the numbers on paper
- Lease agreement template: put the rent and terms you counted on in writing.
- Rent receipt template: give tenants a record of each payment.
- Late rent notice template: ask for rent that is overdue, since vacancy and late rent cut income.
- Move-in inspection checklist: record the condition of the unit before a tenant moves in.
- PDF tools and templates for landlords: the paperwork for a rental in one place.
- Rental property calculator: add a loan and see monthly cash flow.
- All business calculators: the full list of free calculators.
Key facts
- Privacy: We don't sell your data. This tool runs in your browser, so your files stay on your device and are never uploaded.
- Ads: none. No third-party ads and no ad cookies.
- Limits: working out a result is free, needs no account and is never counted. Saving the result as a PDF counts as one of your free uses. Emailing it to yourself is optional. Pro has no limit on uses with Pro.
- Price: free to start. The editable Excel version with live formulas is part of Pro, $2.99 a month or $24 a year. Pro cancels in one click.
- Results are estimates for planning, not financial, tax or investment advice.
Last updated:
By the PDFinish editorial team · Reviewed
Common questions
Is the cap rate calculator free?
Yes. Working out a result is free, needs no account and is never counted. Saving the result as a PDF counts like any other PDFinish file under the free allowance shown on this page. The editable Excel version is part of Pro.
Are my numbers uploaded?
No. The maths runs in your browser and nothing you type is sent to our servers. If you choose Email it to me, only the finished PDF is sent, to the address you give, and we delete it after 7 days.
Can I find a price from a cap rate?
Yes. Leave the purchase price empty, enter the income and costs, and type the cap rate you want. The calculator shows the price that gives that cap rate. If you enter both a price and a target, it also shows the gap between them.
What does the Excel download include?
Pro members can download a spreadsheet with your inputs in cells and live formulas for vacancy loss, net operating income, the cap rate and the price at your target. Change a number in Excel or Google Sheets and every result updates.
Is this financial or investment advice?
No. The results are estimates for planning. They are not financial, tax or investment advice, and they depend entirely on the numbers you enter. Ask a qualified adviser about a purchase before you commit to it.