Capitalization Rate = NOI ÷ Property Value. Use the 3 solve modes to find any variable.
Net Operating Income
$26,200
Cap Rate
7.49%
Gross Rent Multiplier
9.72x
Cash Yield
7.49%
Investment Quality:
Cap Rate Benchmarks
The capitalization rate (cap rate) is a real estate metric that expresses the ratio of a property's net operating income (NOI) to its current market value. Formula: Cap Rate = NOI ÷ Property Value. It lets investors quickly compare properties regardless of financing structure.
Cap rates vary by market and asset class. Class A apartments in primary markets may trade at 3–4%, while industrial properties in secondary markets may yield 7–9%. Generally, a higher cap rate indicates more income relative to price — but also potentially more risk. Many investors target 5–8% for residential income property.
Cap rate ignores financing and measures property performance on its own merits. Cash-on-cash return measures the income relative to your actual cash invested (down payment + closing costs), accounting for mortgage payments. Both metrics are essential for a complete investment analysis.