{"id":10199,"date":"2023-03-10T00:01:58","date_gmt":"2023-03-10T05:01:58","guid":{"rendered":"https:\/\/listwithclever.com\/cap-rate-calculator\/"},"modified":"2026-03-25T10:14:39","modified_gmt":"2026-03-25T15:14:39","slug":"cap-rate-calculator","status":"publish","type":"post","link":"https:\/\/listwithclever.com\/cap-rate-calculator\/","title":{"rendered":"Cap Rate Calculator: What's a Good Cap Rate for You?"},"content":{"rendered":"\n

If you are considering buying a rental property, one tidbit of advice you may keep hearing is to \u201ccheck the cap rate<\/strong>.\u201d But calculating the property\u2019s cap rate and knowing what that information means are two different things.<\/p>\n\n\n\n

This article has two parts:<\/p>\n\n\n\n

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  1. A calculator tool you can use to estimate the cap rate on your new rental property <\/li>\n\n\n\n
  2. An in-depth guide on cap rates, how to assess property cap rates, and what they mean for your overall investment<\/li>\n<\/ol>\n\n\n\n

    Ultimately, cap rates are just one factor that goes into the decision to buy an investment property<\/a>. This article will show you how to evaluate cap rates and help you understand when they should impact your investment decision.<\/p>\n\n\n\n

    What is a cap rate?<\/h2>\n\n\n\n

    A cap rate<\/strong> is a real estate metric that represents the expected financial return on a rental property. It is typically expressed as a percentage value and is equal to the annual net operating income (NOI)<\/em> of the property divided by the purchase price\/current market value<\/em>:<\/p>\n\n\n\n

    Net operating income is equal to the gross income the property generated minus necessary expenses, like taxes and maintenance.[1]<\/span> Note that these calculations exclude mortgage obligations.<\/p>\n\n\n\n

    For example, a property purchased for $300,000 with a NOI of $18,000 would have a cap rate of ($18,000 \u00f7 $300,000) x 100 = 6%<\/strong>. You can think of a cap rate as a snapshot of a property\u2019s potential income relative to its value at a specific point in time.<\/p>\n\n\n\n

    It tells you how much of the property\u2019s current value you\u2019d earn back annually from rental income.<\/p>\n\n\n\n

    A higher cap rate means higher potential returns, but also higher risk. Conversely, lower cap rates mean lower returns but a more stable investment.<\/p>\n\n\n\n

    How to use the calculator<\/h2>\n\n\n
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