Real Estate Cap Rate Calculator
/* Calculator Container */
.cap-rate-calculator-container {
max-width: 800px;
margin: 0 auto;
font-family: -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, Helvetica, Arial, sans-serif;
border: 1px solid #e2e8f0;
border-radius: 8px;
box-shadow: 0 4px 6px rgba(0,0,0,0.1);
background-color: #ffffff;
overflow: hidden;
}
/* Header */
.calc-header {
background-color: #2c3e50;
color: #ffffff;
padding: 20px;
text-align: center;
}
.calc-header h2 {
margin: 0;
font-size: 24px;
}
/* Input Section */
.calc-body {
padding: 30px;
display: flex;
flex-wrap: wrap;
gap: 20px;
}
.input-group {
flex: 1 1 45%;
display: flex;
flex-direction: column;
min-width: 250px;
}
.input-group label {
font-weight: 600;
margin-bottom: 8px;
color: #4a5568;
font-size: 14px;
}
.input-wrapper {
position: relative;
display: flex;
align-items: center;
}
.prefix, .suffix {
position: absolute;
color: #718096;
font-weight: 500;
}
.prefix { left: 12px; }
.suffix { right: 12px; }
.input-group input {
width: 100%;
padding: 12px 12px 12px 25px; /* Padding left for currency symbol */
border: 1px solid #cbd5e0;
border-radius: 6px;
font-size: 16px;
transition: border-color 0.2s;
}
.input-group input.percent-input {
padding-left: 12px;
padding-right: 25px;
}
.input-group input:focus {
outline: none;
border-color: #3182ce;
box-shadow: 0 0 0 3px rgba(66, 153, 225, 0.2);
}
/* Button */
.calc-actions {
width: 100%;
text-align: center;
margin-top: 10px;
}
.calc-btn {
background-color: #3182ce;
color: white;
border: none;
padding: 14px 40px;
font-size: 18px;
font-weight: bold;
border-radius: 6px;
cursor: pointer;
transition: background-color 0.2s;
}
.calc-btn:hover {
background-color: #2b6cb0;
}
/* Results Section */
.calc-results {
background-color: #f7fafc;
border-top: 1px solid #e2e8f0;
padding: 30px;
display: none; /* Hidden by default */
}
.result-grid {
display: grid;
grid-template-columns: 1fr 1fr;
gap: 20px;
}
.result-card {
background: white;
padding: 20px;
border-radius: 8px;
border: 1px solid #e2e8f0;
text-align: center;
}
.result-label {
color: #718096;
font-size: 13px;
text-transform: uppercase;
letter-spacing: 0.5px;
margin-bottom: 5px;
}
.result-value {
font-size: 28px;
font-weight: 800;
color: #2d3748;
}
.result-value.highlight {
color: #38a169;
}
/* Article Content */
.seo-content {
max-width: 800px;
margin: 40px auto;
font-family: -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, sans-serif;
color: #2d3748;
line-height: 1.6;
}
.seo-content h2 { color: #2c3e50; border-bottom: 2px solid #edf2f7; padding-bottom: 10px; margin-top: 40px; }
.seo-content h3 { color: #2c3e50; margin-top: 30px; }
.seo-content p { margin-bottom: 15px; }
.seo-content ul { margin-bottom: 20px; padding-left: 20px; }
.seo-content li { margin-bottom: 8px; }
.seo-content .formula-box { background: #f7fafc; padding: 15px; border-left: 4px solid #3182ce; font-family: monospace; margin: 20px 0; }
@media (max-width: 600px) {
.result-grid { grid-template-columns: 1fr; }
.input-group { flex: 1 1 100%; }
}
Net Operating Income (NOI)
$0
Capitalization Rate
0.00%
Effective Gross Income
$0
Total Expense Ratio
0.00%
function calculateCapRate() {
// Get Input Values
var price = parseFloat(document.getElementById("propertyPrice").value);
var grossIncome = parseFloat(document.getElementById("grossIncome").value);
var vacancyRate = parseFloat(document.getElementById("vacancyRate").value);
var expenses = parseFloat(document.getElementById("annualExpenses").value);
// Validate Inputs
if (isNaN(price) || isNaN(grossIncome) || isNaN(expenses) || price 0) {
expenseRatio = (expenses / effectiveGrossIncome) * 100;
}
// Display Results
document.getElementById("resultsSection").style.display = "block";
// Formatting currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 0,
maximumFractionDigits: 0,
});
document.getElementById("displayNOI").innerHTML = formatter.format(noi);
document.getElementById("displayCapRate").innerHTML = capRate.toFixed(2) + "%";
document.getElementById("displayEGI").innerHTML = formatter.format(effectiveGrossIncome);
document.getElementById("displayExpenseRatio").innerHTML = expenseRatio.toFixed(1) + "%";
// Scroll to results
document.getElementById("resultsSection").scrollIntoView({behavior: "smooth"});
}
Understanding Capitalization Rate (Cap Rate)
The Capitalization Rate, or "Cap Rate," is one of the most fundamental metrics in real estate investing. It measures the rate of return on an investment property based on the income the property is expected to generate. This calculator helps investors quickly determine the potential profitability of a real estate asset before factoring in financing costs.
How is Cap Rate Calculated?
The Cap Rate formula is straightforward but requires accurate inputs regarding the property's income and expenses. The formula is:
Cap Rate = (Net Operating Income / Current Market Value) × 100
To use this calculator effectively, you need to understand the components:
- Net Operating Income (NOI): This is your annual revenue minus all necessary operating expenses. Note that NOI does not include mortgage payments (debt service).
- Operating Expenses: These include property taxes, insurance, management fees, maintenance, utilities, and landscaping. It does not include capital expenditures (like a new roof) or mortgage interest.
- Vacancy Rate: No property is occupied 100% of the time forever. A realistic vacancy rate (typically 5-10%) ensures your calculation reflects real-world cash flow.
What is a "Good" Cap Rate?
There is no single "good" Cap Rate, as it varies significantly by location and asset class. However, general guidelines include:
- 4% – 5%: Often found in high-demand, low-risk areas (like downtown San Francisco or NYC). These properties are safer but offer lower annual returns.
- 6% – 8%: Considered a healthy balance between risk and return for many residential and commercial investments in stable secondary markets.
- 10%+: High returns often indicate higher risk, such as properties in declining neighborhoods or those requiring significant renovation.
Why Use a Cap Rate Calculator?
Using a Cap Rate Calculator allows you to compare different properties on an apples-to-apples basis, regardless of how they are financed. Since Cap Rate ignores debt service, it tells you the raw profitability of the asset itself. If a property has a Cap Rate lower than your mortgage interest rate, you may experience negative leverage, meaning you lose money on the financing.
Difference Between Cap Rate and Cash-on-Cash Return
While Cap Rate looks at the property's return as if you bought it with all cash, Cash-on-Cash Return factors in your financing. If you are taking out a mortgage, you should calculate both metrics. Use the Cap Rate to assess the deal quality and the Cash-on-Cash return to assess your actual liquidity.