Calculate the Capitalization Rate of your investment property accurately.
Property Details
Annual Operating Expenses
Effective Gross Income:$0.00
Total Operating Expenses:$0.00
Net Operating Income (NOI):$0.00
Capitalization Rate:0.00%
function calculateCapRate() {
// 1. Get Values
var price = parseFloat(document.getElementById('propertyPrice').value);
var grossIncome = parseFloat(document.getElementById('grossRentalIncome').value);
var vacancy = parseFloat(document.getElementById('vacancyRate').value);
var tax = parseFloat(document.getElementById('propertyTax').value);
var insurance = parseFloat(document.getElementById('insuranceCost').value);
var maintenance = parseFloat(document.getElementById('maintenanceCost').value);
var management = parseFloat(document.getElementById('managementFees').value);
var other = parseFloat(document.getElementById('otherExpenses').value);
// 2. Validate inputs (handle NaN by defaulting to 0 for calculations, but alert for criticals)
if (isNaN(price) || price <= 0) {
alert("Please enter a valid Property Price.");
return;
}
if (isNaN(grossIncome) || grossIncome < 0) {
alert("Please enter a valid Gross Rental Income.");
return;
}
// Default other values to 0 if empty
if (isNaN(vacancy)) vacancy = 0;
if (isNaN(tax)) tax = 0;
if (isNaN(insurance)) insurance = 0;
if (isNaN(maintenance)) maintenance = 0;
if (isNaN(management)) management = 0;
if (isNaN(other)) other = 0;
// 3. Logic
// Calculate effective income (Gross – Vacancy Loss)
var vacancyLoss = grossIncome * (vacancy / 100);
var effectiveGrossIncome = grossIncome – vacancyLoss;
// Calculate Total Expenses
var totalExpenses = tax + insurance + maintenance + management + other;
// Calculate NOI (Net Operating Income)
var noi = effectiveGrossIncome – totalExpenses;
// Calculate Cap Rate
var capRate = (noi / price) * 100;
// 4. Update UI
document.getElementById('resEffectiveIncome').textContent = formatCurrency(effectiveGrossIncome);
document.getElementById('resTotalExpenses').textContent = formatCurrency(totalExpenses);
document.getElementById('resNOI').textContent = formatCurrency(noi);
document.getElementById('resCapRate').textContent = capRate.toFixed(2) + "%";
// Show results
document.getElementById('resultsArea').style.display = 'block';
}
function formatCurrency(num) {
return '$' + num.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
}
What is a Cap Rate Calculator?
This Real Estate Cap Rate Calculator is designed to help investors evaluate the profitability of an investment property. The Capitalization Rate (Cap Rate) is a fundamental metric used in commercial and residential real estate to estimate the potential return on an investment, assuming the property is bought with cash.
How to Calculate Cap Rate
The formula for Capitalization Rate is relatively simple but requires accurate inputs for operating income and expenses. The formula is:
Cap Rate = Net Operating Income (NOI) / Property Asset Value
Where Net Operating Income (NOI) is calculated by subtracting all operating expenses from the total revenue generated by the property.
Key Inputs Explained
Property Purchase Price: The total cost to acquire the property or its current market value.
Gross Rental Income: The total income potential of the property if 100% occupied for the full year.
Vacancy Rate: A percentage estimate of time the property will sit empty or unpaid. A standard conservative estimate is often 5-10%.
Operating Expenses: Costs required to run the property, including taxes, insurance, maintenance, and management fees. Note: Mortgage payments (debt service) are not included in Cap Rate calculations.
What is a "Good" Cap Rate?
There is no single "good" Cap Rate, as it varies by location and asset class. However, generally speaking:
4% – 5%: Often found in high-demand, low-risk areas (like major city centers).
6% – 8%: considered a healthy balance of risk and return for many residential investors.
8% – 12%+: Higher potential returns, but often associated with higher risk properties or rural areas.
Use this calculator to compare different properties quickly. A higher Cap Rate implies a better annual return on your cash investment, but always consider the underlying risks associated with the property.