Cap Rate Calculator
The unlevered yield — what an all-cash buyer earns from operations.
Inputs
Edit any field — results recompute instantly.
Results
Computed live from your inputs.
6-9% is the typical single-family rental range in 2026.
Lower GRM = better yield. Sub-10 = strong cash flow market; 15+ = appreciation play.
What this calculator does
Cap rate is the standard apples-to-apples comparison metric for rental properties. It strips out financing to show what a property would yield to an all-cash buyer. Use this calculator to compute cap rate from gross rent, operating expenses, and purchase price, or to reverse-engineer the purchase price needed to hit a target cap rate.
How to calculate cap rate
- Multiply monthly rent × 12 for gross annual rent.
- Subtract vacancy allowance (5-8% typical).
- Subtract all operating expenses — taxes, insurance, HOA, property management, maintenance, capex reserves.
- The result is Net Operating Income (NOI).
- Divide NOI by the purchase price (or current market value) to get cap rate.
Terms worth knowing.
Capitalization Rate (cap rate) is a property's annual NOI divided by its purchase price (or current market value), expressed as a percentage. It's an unlevered yield metric — the return an all-cash buyer would earn before financing.
Net Operating Income (NOI) is a rental property's annual gross rental income minus all operating expenses, before debt service and income taxes. NOI is the denominator of cap rate and the numerator of DSCR — it's the most-used number in rental underwriting.
Gross rent yield is annual gross rent divided by the property's purchase price (or current value), expressed as a percentage. It ignores operating expenses and is used as a quick first-pass screening metric. A 6% gross yield is roughly the floor for a viable rental in most US markets in 2026.
Debt Service Coverage Ratio (DSCR) is the ratio of a property's annual net operating income to its annual debt service. A DSCR of 1.20 means the property generates 20% more income than it needs to cover the loan payment. Most DSCR lenders require 1.10-1.25 to underwrite.
Cash-on-cash return is annual pre-tax cash flow divided by the total cash the investor put into the deal (down payment + closing + rehab + reserves). Unlike cap rate, it accounts for financing. The most useful metric for comparing leveraged investments.
More REI math tools.
The Weekly Deal Memo
One market memo, one off-market playbook, one tool review. Every Friday. Free.
No spam. Unsubscribe anytime.