Rental Cap Rate Calculator: NOI as a Share of Property Price
Work out a rental property's cap rate — the headline yield investors use to compare income properties before financing is taken into account.
Adjust the inputs and select Calculate for a full breakdown.
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | Cap rate | Non-yield share |
|---|---|---|
| $30k NOI · $500k price | 6.00% | 94.00% |
| $18k NOI · $400k price | 4.50% | 95.50% |
| $60k NOI · $750k price | 8.00% | 92.00% |
| $12k NOI · $220k price | 5.45% | 94.55% |
How This Calculator Works
Enter the annual net operating income — gross rent minus operating expenses but before mortgage payments — and the property price. The calculator divides one by the other and multiplies by 100 to give the cap rate, the yield the property generates on the purchase price.
The Formula
Part as a Percentage of a Whole
Part is the portion, Whole is the total it belongs to
Worked Example
A property earning $30,000 of NOI on a $500,000 purchase price posts a 6% cap rate. Typical cap rates run 4% to 8% on residential rentals — lower in supply-constrained metros, higher in markets where rent growth is slower.
Key Insight
Cap rate is intentionally unleveraged — it strips out financing so two properties can be compared like for like. The leveraged return after a mortgage is usually much higher than the cap rate when rates are low, and can be lower or negative when rates exceed the cap rate.
Frequently Asked Questions
How is cap rate calculated?
Divide net operating income by the property price, then multiply by 100. NOI of $30,000 on a $500,000 property is a 6% cap rate.
What goes into NOI?
Gross rent minus operating expenses — property tax, insurance, maintenance, property management, utilities you pay, and a vacancy allowance. NOI excludes mortgage payments and depreciation.
What is a good cap rate?
Residential rentals commonly run 4% to 8%. Lower cap rates often signal high-demand markets with strong appreciation expectations; higher cap rates can mean weaker markets or higher operating risk.
How does cap rate differ from cash-on-cash return?
Cap rate ignores financing; cash-on-cash measures return after the mortgage payment, on the actual cash invested. A 6% cap rate with cheap leverage can produce a 12%+ cash-on-cash.
Is cap rate the same as ROI?
No. Cap rate is a yield on price; ROI is the total return on money invested. Cap rate is the right lens for comparing properties before a financing decision.
Related Calculators
Data Sources & Benchmarks
This calculator draws on 1 independent, dated source.
Methodology & Review
The cap rate is net operating income divided by property price, multiplied by 100. NOI is gross rent less operating expenses but before debt service and depreciation. The complement is shown as a reminder of how much of the purchase price is covered by something other than yearly income.
Written by Ugo Candido · Last updated May 17, 2026.