How do you calculate cap rate?

Cap Rate = (Net Operating Income ÷ Property Value) × 100. NOI is annual rental income minus operating expenses (taxes, insurance, maintenance, management, vacancy) — but BEFORE the mortgage.

What is a good cash on cash return for rentals?

Target 8–12%+ cash-on-cash for stabilized rentals. Value-add or BRRRR deals can hit 15–20%+ once optimized.

What's the difference between cap rate and cash on cash return?

Cap rate ignores financing — it's the property's standalone return. Cash on cash return includes your mortgage payment and reflects actual cash you receive on your invested capital.

Is this cap rate calculator free?

Yes — completely free with 7 analyses per month per account, no credit card required.

Free Cap Rate Calculator — Cap Rate & Cash on Cash Return

Compare any two investment properties in seconds. Our free cap rate calculator returns capitalization rate, NOI, cash-on-cash return, and DSCR — the four metrics every rental investor needs to underwrite a deal correctly.

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Cap Rate Calculator

Capitalization rate from NOI and property value — instant valuation comparison.

Cash on Cash Return

Annual cash flow over total cash invested — accounts for financing.

Side-by-Side Compare

Compare multiple properties using standardized return metrics.

Full NOI Breakdown

Net Operating Income with line-item expense modeling.

AI Investment Score

Each property gets a 0–100 score based on returns and risk profile.

Income-Approach Valuation

Estimate fair property value from NOI and target cap rate.

Cap Rate Calculator — How Capitalization Rate Works

The cap rate measures a property's potential return based on income, independent of how you finance it:

Cap Rate = Net Operating Income (NOI) ÷ Property Value × 100

Example: A property with $50,000 NOI and $500,000 value has a 10% cap rate.

Higher cap rate = higher potential return (often higher-risk markets)
Lower cap rate = lower return (typically prime locations / lower risk)
Because cap rate ignores financing, it's the cleanest way to compare deals across markets

Cash on Cash Return — The Real Investor Metric

Cash on cash return measures your actual cash return on the cash you put in:

Cash on Cash Return = Annual Cash Flow ÷ Total Cash Invested × 100

Unlike cap rate, this calculator accounts for:

Down payment
Closing costs and lender fees
Mortgage payment (PITI) and debt service
Real after-debt cash flow

This is the metric most experienced rental investors track because it reflects what actually hits your bank account.

Frequently Asked Questions

Good cap rates vary by market: 4–6% in prime urban areas, 6–8% in suburban markets, 8–12%+ in secondary or tertiary markets. Compare against local averages, not national benchmarks.

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Rental Property Calculator BRRRR Calculator ARV Calculator Cap Rate vs Cash on Cash Guide

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