Cap Rate Calculator: NOI, Property Value and Cash Flow

Cap Rate Calculator

Estimate net operating income, capitalization rate, value at a target cap rate, cash flow, cash-on-cash return and debt-service coverage.








Operating expenses exclude loan payments, depreciation, income tax and owner-specific financing. Enter debt service separately.

Cap rate and NOI formulas

Effective gross income = (scheduled rent + other property income) × (1 − vacancy rate). NOI = effective gross income − operating expenses. Cap rate = NOI ÷ property value × 100%.

The value implied by a target cap rate is NOI ÷ target cap rate. This is a direct-income approach, not an appraisal, and it is sensitive to every income and expense assumption.

Checked example

A $400,000 property with $42,000 annual rent, $1,200 other income, 5% vacancy and $12,000 operating expenses has effective gross income of $41,040 and NOI of $29,040. Its cap rate is 7.26%. At a 7% target cap rate, the NOI implies a value of about $414,857.

What counts as an operating expense?

Typical operating expenses can include property tax, insurance, management, repairs, maintenance, owner-paid utilities and routine administrative costs. Do not include mortgage principal and interest in operating expenses when calculating NOI. Enter annual loan payments under debt service instead.

Cash-on-cash return and DSCR

Cash-on-cash return divides annual pre-tax cash flow by the cash invested. DSCR divides NOI by annual debt service. These measures depend on financing, unlike cap rate. The tool shows them together for comparison but does not treat them as synonyms.

Limits

  • Results are estimates and do not replace an appraisal, inspection, loan underwriting, tax advice or investment analysis.
  • Capital expenditures, income tax, depreciation, appreciation and sale costs are not projected.
  • Use annual amounts from the same period and verify leases, vacancy, expenses and financing independently.
  • A negative NOI produces a negative cap rate; value from a target cap rate is then not meaningful.

Related calculators

Use the Real Estate Commission Calculator for transaction costs, the ROI Calculator for total investment return, or the Compound Interest Calculator for projected growth.