Cap Rate Calculator
Enter a price and income to get the cap rate instantly, benchmarked against typical ranges for the asset class, with DSCR, cash-on-cash, and a value sensitivity matrix. Free, no signup.
Assumes 25-year amortization. Clear either field to skip DSCR and cash-on-cash.
Value sensitivity: exit cap × NOI change
Blue cell = your current basis. Shaded cells are within 5% of it.
| NOI Δ | 5.5% cap | 6% cap | 6.5% cap | 7% cap | 7.5% cap |
|---|---|---|---|---|---|
| -10% | $2.55M | $2.34M | $2.16M | $2.01M | $1.87M |
| -5% | $2.69M | $2.47M | $2.28M | $2.12M | $1.98M |
| 0% | $2.84M | $2.60M | $2.40M | $2.23M | $2.08M |
| +5% | $2.98M | $2.73M | $2.52M | $2.34M | $2.18M |
| +10% | $3.12M | $2.86M | $2.64M | $2.45M | $2.29M |
Illustrative only, not an appraisal or investment advice.
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Leveraged return on your actual cash in.
Will the deal clear the lender's coverage bar?
NOI plus a market cap rate: what a property is worth.
Line-item income and expenses down to NOI.
What is a cap rate?
The capitalization rate measures a property's unleveraged annual return: the net operating income a property produces divided by its price. It's the fastest way to compare income properties of different sizes, and the market's shorthand for how a property is priced relative to the income it generates.
A $2,400,000 building producing $156,000 in annual NOI trades at a 6.5% cap. Flip the formula and it becomes a valuation tool: the same NOI at a 6% market cap implies a $2.6M value; at 7%, $2.23M. Small cap rate movements swing value a lot, which is exactly what the sensitivity matrix above shows.
What's a good cap rate in 2026?
It depends on the asset class, market, and risk. Lower cap rates mean the market prices the income as safer; higher cap rates price in more risk or more upside. Typical ranges for stabilized assets in Southeast secondary markets:
| Asset type | Typical cap range |
|---|---|
| Multifamily 5+ | 4.8-6.2% |
| Industrial (flex) | 5.0-6.5% |
| Self storage | 5.5-7.0% |
| Retail (strip center) | 6.0-7.5% |
| Office (suburban) | 7.0-9.5% |
Illustrative stabilized ranges; individual deals vary by market, tenancy, and condition.
Cap rate vs. cash-on-cash vs. DSCR
Cap rate ignores your loan: it describes the property. Cash-on-cash describes your equity: cash flow after debt service divided by the cash you put in. DSCR describes the lender's view: NOI divided by annual debt service, with most CRE lenders wanting at least 1.25×. A deal can look fine on cap rate and still fail DSCR at today's rates, which is why this calculator computes all three from the same inputs.
Frequently asked questions
Does a higher cap rate mean a better deal?+−
Not by itself. A higher cap rate means more income per dollar of price, but usually because the market sees more risk: weaker tenancy, deferred maintenance, or a softer submarket. The play is finding a property priced at a high cap whose risk you can actually fix.
Should I use actual or pro-forma NOI?+−
Underwrite on actuals and negotiate on actuals. Brokers often quote pro-forma cap rates based on projected income after rent increases that have not happened yet. Ask for a trailing-12 operating statement and compute the cap rate on real numbers.
What expenses go into NOI?+−
All operating costs: taxes, insurance, utilities, management, repairs, and reserves. NOI excludes debt service, depreciation, and capital expenditures. Forgetting management (typically 4-8% of gross income) is the most common way NOI gets overstated.
How do cap rates relate to interest rates?+−
Cap rates tend to follow borrowing costs with a lag. When debt costs more than the cap rate (negative leverage), buyers demand higher caps or walk away, which pushes prices down. The spread between the cap rate and your interest rate is a quick health check on any leveraged deal.