Use this calculator to measure your current return on a single rental property or compare multiple holdings.
The math: (Net Operating Income / Property Total Value)*100 = CAP RATE
Cap Rate does not include debt servicing costs. It can be calculated using different definitions of Expenses (cost) and net operating income (NOI), but we’ve included income and expenses most common to rental property investments.
It’s best to use actual income and expense numbers from the previous year. We also recommend using the property’s current market value instead of purchase price to give you a realistic view of your cap rate in the current market.
There is no “ideal” cap rate; a lower cap rate indicates lower risk (but also lower returns). Generally this figure should be between 4% and 10% for rental properties, but will vary depending on your local market and personal risk tolerance.
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