Real Estate Cap Rate Calculator Excel

Real Estate Cap Rate Calculator

Professional Property Yield Analysis

Net Operating Income (NOI)

$0.00

Capitalization Rate

0.00%

---

How to Use the Real Estate Cap Rate Calculator Excel Formula

The Capitalization Rate (Cap Rate) is the most critical metric used by real estate investors to evaluate the profitability and return potential of an income-generating property. This calculator mirrors the logic found in advanced Excel templates used by institutional investors.

The Mathematical Formula

To calculate the Cap Rate manually or in Excel, use this sequence:

1. Gross Operating Income: Gross Annual Rent – (Gross Annual Rent × Vacancy Rate)
2. Net Operating Income (NOI): Gross Operating Income – Annual Operating Expenses
3. Cap Rate: (NOI / Property Value) × 100

Real-World Example

Imagine you are looking at a multi-family property with the following profile:

• Property Value: $1,000,000
• Gross Rent: $120,000 / year
• Vacancy Rate: 5% ($6,000)
• Operating Expenses: $34,000 (Taxes, Insurance, Maintenance)

Step 1: Calculate NOI. $120,000 – $6,000 – $34,000 = $80,000.
Step 2: Divide NOI by Value. $80,000 / $1,000,000 = 0.08.
Step 3: Result is an 8% Cap Rate.

What is a "Good" Cap Rate?

Cap rates vary significantly by asset class and location. Generally, a lower cap rate (4-5%) indicates a lower-risk property in a high-demand "gateway" city like New York or London. A higher cap rate (8-10%) often indicates a higher-risk investment or a property in a secondary market with less appreciation potential but higher immediate cash flow.

function calculateCapRate() { var propertyValue = parseFloat(document.getElementById("propertyValue").value); var grossIncome = parseFloat(document.getElementById("grossIncome").value); var vacancyRate = parseFloat(document.getElementById("vacancyRate").value); var operatingExpenses = parseFloat(document.getElementById("operatingExpenses").value); // Validation if (isNaN(propertyValue) || isNaN(grossIncome) || isNaN(vacancyRate) || isNaN(operatingExpenses)) { alert("Please fill in all fields with valid numbers."); return; } if (propertyValue <= 0) { alert("Property value must be greater than zero."); return; } // Calculation Logic (Excel Style) var vacancyLoss = grossIncome * (vacancyRate / 100); var effectiveGrossIncome = grossIncome – vacancyLoss; var noi = effectiveGrossIncome – operatingExpenses; var capRate = (noi / propertyValue) * 100; // Display Results document.getElementById("resultsArea").style.display = "block"; document.getElementById("noiResult").innerText = "$" + noi.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById("capRateResult").innerText = capRate.toFixed(2) + "%"; // Scroll to results on mobile document.getElementById("resultsArea").scrollIntoView({ behavior: 'smooth', block: 'nearest' }); }