Cap rate calculator
Enter the property's value, market rent, expected vacancy, and annual operating costs. The calculator turns scheduled rent into effective income, NOI, and an unlevered cap rate you can compare cleanly.
Include recurring property costs. Exclude debt service, depreciation, income tax, and major capital works.
€13,740 NOI ÷ €250,000 property value
Operating costs consume 24.67% of effective rental income.
Estimates only, for general guidance. Use one currency throughout. Cap rate excludes mortgage payments, income tax, depreciation, and capital expenditure.
How to use it
- 1Enter the purchase price or current market value you want to test.
- 2Add monthly market rent and a realistic vacancy allowance.
- 3Enter annual operating costs and compare the resulting NOI and cap rate.
How to use the result
Keep financing out of NOI
Cap rate measures the property before financing, so mortgage principal and interest do not belong in operating expenses. Include recurring property costs such as tax, insurance, management, routine maintenance, and service charges.
Compare like with like
Use the same value basis and expense assumptions for every property. Purchase price can help underwrite an acquisition; current market value is better when comparing how efficiently assets in an existing portfolio are performing today.
Guides and workflows for the result
Use the calculation as a starting point, then examine the assumptions and carry the result into the matching PropFlow workflow.
Questions
- What is cap rate?
- Capitalization rate is annual net operating income divided by property value. It compares the unlevered income return of properties without letting different mortgages distort the result.
- Which expenses belong in NOI?
- Include recurring costs required to operate the property: property tax, insurance, management, repairs, maintenance, utilities paid by the owner, and service charges. Exclude mortgage payments, depreciation, income tax, and major capital improvements.
- Should I use purchase price or current value?
- Use purchase price when assessing a potential acquisition. Use current market value when reviewing an asset you already own. Whichever basis you choose, keep it consistent across the properties you compare.