Cap Rate Calculator
Calculate cap rate, property value, or required NOI with sensitivity analysis and market benchmarks.
Frequently asked questions
How is cap rate calculated?
Cap Rate = Net Operating Income ÷ Property Value. NOI is annual rental income minus operating expenses, before debt service and income taxes. A $1M property generating $60,000 NOI has a 6% cap rate.
What is a good cap rate?
Cap rates vary by asset class and market: 4-6% for stabilized multifamily in primary markets, 6-8% for suburban multifamily and industrial, 7-10% for secondary-market retail, and 8-12% for tertiary or specialty assets. Lower cap rates mean higher price relative to income.
What is cap rate compression?
Cap rate compression is when market cap rates fall over time, which raises property values even if NOI is flat. It typically happens when interest rates drop or investor demand outpaces supply. Cap rate expansion is the reverse — values fall as required yields rise.