Loan Cap Rate Calculator
Find a rental property's capitalization rate in seconds: net operating income divided by current market value. Compare deals on an apples-to-apples basis, with or without financing.
| Net operating income (NOI) | $0 |
| Annual gross rental income | $0 |
| Annual operating expenses | $0 |
| Property value | $0 |
| Monthly net operating income | $0 |
How it works
Cap rate = Net Operating Income ÷ Property Value. NOI is your annual gross rent minus operating expenses (tax, insurance, maintenance, management, vacancy). Mortgage payments are deliberately excluded, so the cap rate measures the property itself — not your financing.
Frequently asked questions
What is a good cap rate?
Most residential rentals fall between 4% and 10%. Higher usually means more risk (or a cheaper market); lower means a pricier, more stable market. Always compare cap rates within the same metro, not across the country.
Cap rate vs. cash-on-cash return — what's the difference?
Cap rate assumes an all-cash purchase and ignores financing. Cash-on-cash measures return on the actual cash you put in, so it changes with your down payment and loan terms. Use both: cap rate to compare properties, cash-on-cash to judge your deal.
Does the cap rate include the mortgage?
No. Operating expenses exclude debt service — principal and interest never go in the cap rate formula. That's what makes it financing-neutral and useful for comparing two properties side by side.
💰 Take the next step
See your return on actual cash invested with the cash-on-cash calculator.