Cap rate calculator
Use this free cap rate calculator to estimate net operating income and capitalization rate from property value, rent, vacancy, and operating expenses.
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Rental property calculator
See what a rental could earn after expenses, financing, and reserves. Change the example numbers to compare your own assumptions. No signup required.
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Example values are filled in to get you started. Results update as you change the inputs.
How the math works.
| Measure | Formula |
|---|---|
| Effective annual income | Annual rent × (1 − vacancy %) + annual other income |
| Net operating income (NOI) | Effective income − operating expenses |
| Annual cash flow | NOI − annual principal & interest − annual capital reserves |
| Cap rate | Annual NOI ÷ purchase price × 100 |
| Cash-on-cash return | Annual cash flow ÷ upfront cash invested × 100 |
| Debt service coverage ratio (DSCR) | Annual NOI ÷ annual principal & interest |
- This is a first-year estimate in US dollars, with constant rent and expenses. It excludes appreciation, sale proceeds, income taxes, and depreciation.
- The loan uses a fixed rate and monthly amortization. Taxes and insurance are included in operating expenses, not counted again in the loan payment. Mortgage insurance, loan fees, and other financing costs are not modeled.
- Upfront cash equals the down payment plus cash-paid closing costs and initial rehab. Maintenance and management are percentages of effective income. Capital reserves reduce cash flow but are excluded from this calculator’s NOI and cap rate.
- DSCR is not applicable without debt. Cash-on-cash return is not applicable when upfront cash is zero. Lenders may calculate expenses, reserves, and coverage differently.
Further reading: CFPB: principal and interest versus the total mortgage payment.
Common questions
Does cap rate include my mortgage payment?
No. Cap rate compares annual NOI with the property price before financing. Cash flow includes the principal-and-interest payment and the capital reserves you enter.
Why can cash flow be negative when NOI is positive?
NOI excludes financing and capital reserves. A property can cover its operating expenses but still have insufficient income for debt service and reserves.
Are the starting numbers market estimates?
No. They are examples. Replace them with your own rent assumptions, lender quote, tax estimate, insurance quote, and operating budget. The calculator does not look up a property or forecast returns.
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ARV calculator
Estimate after repair value using comparable sales and square footage. Calculate an adjustable offer guideline with rehab and other costs. Free ARV calculator.
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