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Real Estate Cap Rate Calculator /* General Styles for WordPress Compatibility */ .calculator-container { max-width: 800px; margin: 20px auto; font-family: -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, Helvetica, Arial, sans-serif; background: #ffffff; padding: 30px; border-radius: 8px; box-shadow: 0 4px 15px rgba(0,0,0,0.05); border: 1px solid #e0e0e0; } .calc-header { text-align: center; margin-bottom: 30px; } .calc-header h2 { color: #2c3e50; margin-bottom: 10px; } .calc-grid { display: grid; grid-template-columns: 1fr 1fr; gap: 20px; } @media (max-width: 600px) { .calc-grid { grid-template-columns: 1fr; } } .input-group { margin-bottom: 15px; } .input-group label { display: block; margin-bottom: 5px; font-weight: 600; color: #4a5568; font-size: 0.95em; } .input-group input { width: 100%; padding: 10px; border: 1px solid #cbd5e0; border-radius: 5px; font-size: 16px; box-sizing: border-box; transition: border-color 0.2s; } .input-group input:focus { border-color: #3182ce; outline: none; } .input-hint { font-size: 0.8em; color: #718096; margin-top: 4px; } .calc-btn-container { text-align: center; margin-top: 20px; grid-column: 1 / -1; } button.calc-btn { background-color: #2b6cb0; color: white; border: none; padding: 12px 30px; font-size: 18px; border-radius: 5px; cursor: pointer; transition: background-color 0.2s; font-weight: bold; } button.calc-btn:hover { background-color: #2c5282; } .result-box { background-color: #ebf8ff; border: 1px solid #bee3f8; padding: 20px; border-radius: 8px; margin-top: 25px; text-align: center; display: none; /* Hidden by default */ } .result-item { margin-bottom: 15px; } .result-label { font-size: 1em; color: #4a5568; margin-bottom: 5px; } .result-value { font-size: 2em; font-weight: 800; color: #2b6cb0; } .result-sub { font-size: 0.9em; color: #718096; } /* Article Content Styles */ .calculator-content { margin-top: 50px; line-height: 1.6; color: #2d3748; } .calculator-content h2 { color: #1a202c; margin-top: 30px; font-size: 1.8em; } .calculator-content h3 { color: #2c5282; margin-top: 25px; font-size: 1.4em; } .calculator-content p { margin-bottom: 15px; } .calculator-content ul { margin-bottom: 20px; padding-left: 20px; } .calculator-content li { margin-bottom: 8px; } .formula-box { background: #f7fafc; border-left: 4px solid #4299e1; padding: 15px; margin: 20px 0; font-family: monospace; color: #2d3748; }

Real Estate Cap Rate Calculator

Calculate the Capitalization Rate and Net Operating Income (NOI) for your investment property.

Estimate of time the property sits empty.
Repairs, HOA fees, management fees.
Capitalization Rate (Cap Rate)
0.00%
Net Operating Income (NOI)
$0
Annually
Total Operating Expenses
$0
Annually

What is Capitalization Rate (Cap Rate)?

The Capitalization Rate, or Cap Rate, is one of the most popular metrics used in commercial and residential real estate to evaluate the profitability of an investment property. It indicates the potential rate of return on the real estate investment.

Unlike Cash on Cash return, the Cap Rate measures the property's natural ability to generate income based on its purchase price, assuming the property was bought with cash (without financing). This makes it an excellent tool for comparing the relative value of different properties regardless of how they are financed.

How to Calculate Cap Rate

The formula for Capitalization Rate is relatively simple but requires accurate data regarding income and operating expenses.

Cap Rate = (Net Operating Income / Current Market Value) × 100

Where Net Operating Income (NOI) is calculated as:

NOI = (Gross Annual Rental Income – Vacancy Losses) – Operating Expenses

Understanding the Inputs

  • Purchase Price: The total price you pay to acquire the property.
  • Monthly Rental Income: The total gross rent collected from tenants per month.
  • Vacancy Rate: A percentage allowance for periods when units are unoccupied. A standard safe estimate is 5-8%.
  • Operating Expenses: Costs required to run the property, including taxes, insurance, property management, repairs, and HOA fees. Note that mortgage payments are not included in Cap Rate calculations.

What is a Good Cap Rate?

A "good" Cap Rate is subjective and depends heavily on the location and risk level of the asset. Generally:

  • 4% – 6%: Common in high-demand, low-risk areas (Class A properties in major cities). These properties usually appreciate well but offer lower immediate cash flow.
  • 6% – 8%: A balanced target for many residential investors in suburban markets.
  • 8% – 12%+: Common in higher-risk neighborhoods or rural areas. These offer higher cash flow to compensate for higher tenant turnover or lower appreciation potential.

Use this calculator to quickly filter potential investment opportunities before diving into a deeper cash flow analysis.

function calculateCapRate() { // 1. Get Input Values var purchasePrice = parseFloat(document.getElementById("purchasePrice").value); var monthlyRent = parseFloat(document.getElementById("monthlyRent").value); var vacancyRate = parseFloat(document.getElementById("vacancyRate").value); var annualTaxes = parseFloat(document.getElementById("annualTaxes").value); var annualInsurance = parseFloat(document.getElementById("annualInsurance").value); var annualMaintenance = parseFloat(document.getElementById("annualMaintenance").value); // 2. Validation if (isNaN(purchasePrice) || isNaN(monthlyRent)) { alert("Please enter at least the Purchase Price and Monthly Rent."); return; } // Set defaults for empty fields to 0 if (isNaN(vacancyRate)) vacancyRate = 0; if (isNaN(annualTaxes)) annualTaxes = 0; if (isNaN(annualInsurance)) annualInsurance = 0; if (isNaN(annualMaintenance)) annualMaintenance = 0; // 3. Calculation Logic // Calculate Gross Annual Income var grossAnnualIncome = monthlyRent * 12; // Calculate Vacancy Loss var vacancyLoss = grossAnnualIncome * (vacancyRate / 100); // Calculate Effective Gross Income var effectiveGrossIncome = grossAnnualIncome – vacancyLoss; // Calculate Total Operating Expenses var totalExpenses = annualTaxes + annualInsurance + annualMaintenance; // Calculate Net Operating Income (NOI) var noi = effectiveGrossIncome – totalExpenses; // Calculate Cap Rate // Avoid division by zero var capRate = 0; if (purchasePrice > 0) { capRate = (noi / purchasePrice) * 100; } // 4. Update UI // Format numbers for display var formatter = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD', minimumFractionDigits: 0, maximumFractionDigits: 0, }); document.getElementById("noiResult").innerHTML = formatter.format(noi); document.getElementById("expensesResult").innerHTML = formatter.format(totalExpenses); document.getElementById("capRateResult").innerHTML = capRate.toFixed(2) + "%"; // Show result box document.getElementById("resultBox").style.display = "block"; // Change color based on performance var capResultElem = document.getElementById("capRateResult"); if(capRate = 8) { capResultElem.style.color = "#38a169"; // Green for high return } else { capResultElem.style.color = "#2b6cb0"; // Blue for standard } }

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