Capitalization Rate (Cap Rate) Calculator
The Capitalization Rate (Cap Rate) is a key metric used in commercial real estate investing to estimate the potential return on an investment property. It represents the ratio of the Net Operating Income (NOI) to the property's current market value or purchase price. A higher cap rate generally indicates a potentially higher return, but it's also often associated with higher risk.
Annual Rental Income:
Annual Operating Expenses:
Property Value or Purchase Price:
Calculate Cap Rate
Your Estimated Cap Rate:
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function calculateCapRate() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var annualExpenses = parseFloat(document.getElementById("annualExpenses").value);
var propertyValue = parseFloat(document.getElementById("propertyValue").value);
var resultElement = document.getElementById("capRateResult");
if (isNaN(annualIncome) || isNaN(annualExpenses) || isNaN(propertyValue)) {
resultElement.textContent = "Please enter valid numbers for all fields.";
return;
}
if (propertyValue <= 0) {
resultElement.textContent = "Property Value must be greater than zero.";
return;
}
var netOperatingIncome = annualIncome – annualExpenses;
var capRate = (netOperatingIncome / propertyValue) * 100;
if (isNaN(capRate)) {
resultElement.textContent = "Calculation error. Please check your inputs.";
} else {
resultElement.textContent = capRate.toFixed(2) + "%";
}
}
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