How to Calculate the Capitalization Rate

Capitalization Rate Calculator

The capitalization rate (cap rate) is a key metric in real estate investing used to estimate the potential return on an investment property. It's calculated by dividing the Net Operating Income (NOI) by the property's current market value or purchase price. A higher cap rate generally indicates a more attractive investment, suggesting a better potential return relative to the property's cost. However, cap rates can vary significantly by market and property type, so it's essential to compare them against similar properties in the same area.

Result:

Your calculated Capitalization Rate will appear here.

function calculateCapRate() { var noi = parseFloat(document.getElementById("netOperatingIncome").value); var propertyValue = parseFloat(document.getElementById("propertyValue").value); var resultDiv = document.getElementById("result"); if (isNaN(noi) || isNaN(propertyValue) || propertyValue <= 0) { resultDiv.innerHTML = "Please enter valid numbers for Net Operating Income and Property Value (value must be greater than 0)."; return; } var capRate = (noi / propertyValue) * 100; resultDiv.innerHTML = "Net Operating Income (NOI): $" + noi.toLocaleString() + "" + "Property Value: $" + propertyValue.toLocaleString(undefined, { maximumFractionDigits: 0 }) + "" + "Capitalization Rate (Cap Rate): " + capRate.toFixed(2) + "%"; } .calculator-container { font-family: sans-serif; max-width: 600px; margin: 20px auto; padding: 20px; border: 1px solid #ccc; border-radius: 8px; box-shadow: 0 2px 4px rgba(0, 0, 0, 0.1); } .calculator-inputs h2, .calculator-result h3 { text-align: center; margin-bottom: 15px; color: #333; } .calculator-inputs p { margin-bottom: 20px; line-height: 1.5; color: #555; } .input-group { margin-bottom: 15px; } .input-group label { display: block; margin-bottom: 5px; font-weight: bold; color: #444; } .input-group input[type="number"] { width: calc(100% – 20px); padding: 10px; border: 1px solid #ccc; border-radius: 4px; font-size: 16px; } button { width: 100%; padding: 12px 20px; background-color: #4CAF50; color: white; border: none; border-radius: 4px; font-size: 18px; cursor: pointer; transition: background-color 0.3s ease; } button:hover { background-color: #45a049; } .calculator-result { margin-top: 25px; padding: 15px; background-color: #f9f9f9; border: 1px solid #eee; border-radius: 4px; } .calculator-result p { margin-bottom: 10px; color: #333; } .calculator-result span { font-weight: bold; }

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