Cap Rate Calculator
Size up any investment property and benchmark it against others using the capitalization rate.
What This Calculator Does
The calculator derives the capitalization rate by dividing Net Operating Income by the property price — a financing-independent metric that lets you cut through the noise and compare investment properties on equal footing.
Who Is This For
Investors weighing multiple properties side by side, buyers underwriting commercial or multi-family acquisitions, and anyone digging into Miami investment opportunities who wants an objective performance benchmark.
How It Works
Provide the property price, total annual rental income, and annual operating expenses. The calculator will compute your Net Operating Income and display the resulting Cap Rate as a percentage.
Frequently Asked Questions
What is a good cap rate?
What counts as good shifts with location and asset type. In Miami, prime locations typically land in the 4-6% range, while emerging neighborhoods can yield 7-10%. As a rule of thumb, a higher cap rate reflects higher risk.
What is Net Operating Income (NOI)?
NOI is what remains after you subtract all operating expenses — taxes, insurance, maintenance, and management fees — from gross annual rental income. Mortgage payments and depreciation are not factored in.
Why does cap rate matter?
Because it strips out financing, cap rate gives you a clean apples-to-apples comparison across properties. It reflects the all-cash yield you would earn on the asset, making it the go-to metric for sizing up competing deals.
What is the relationship between cap rate and price?
Cap rate and price move in opposite directions — when prices climb, cap rates shrink. A lower cap rate signals that you are paying a premium relative to the income the property produces, typically because you are accepting lower risk or buying into a more desirable location.