Cap Rate Calculator
Calculate NOI, cap rate, gross yield, and net yield for any rental property in seconds. Free, no signup, no email.
Last updated: July 2026
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Estimates only. Actual results depend on local rents, vacancy, expenses, and financing terms. Not investment advice.
How to Use This Calculator
- Enter the property value (the price you paid or are evaluating).
- Enter the annual gross rent the property would earn at 100% occupancy. Multiply monthly rent by 12.
- Adjust the vacancy rate for realistic downtime (5-10% is typical for residential).
- Enter annual operating expenses: property tax, insurance, property management, maintenance, utilities. Do NOT include mortgage payments.
- Toggle to Financed if you're using a loan, then enter down payment %, interest rate, and term.
- Results update instantly. The cap rate is the primary number — compare it to other properties and to the typical ranges for the property class.
What is a Cap Rate?
A cap rate (short for capitalization rate) is the most common metric used to compare rental properties on an apples-to-apples basis. It tells you what annual return a property would deliver if you bought it all-cash, ignoring financing. The formula is simple:
Cap Rate = Net Operating Income (NOI) ÷ Property Value × 100
A property with $22,200 in NOI that costs $400,000 has a 5.55% cap rate ($22,200 ÷ $400,000 × 100). That 5.55% is the unleveraged yield — the return you'd earn on the full purchase price before accounting for any mortgage.
Cap rate matters because it strips out the financing question (which varies wildly between investors) and gives you a clean number to compare: a $300K duplex with $18K NOI has the same 6% cap as a $3M apartment building with $180K NOI. Different price points, same yield profile.
The catch: cap rate doesn't tell you whether the deal is good. A 4% cap in San Francisco might be excellent if rents are stable and appreciation is strong. A 10% cap in a Rust Belt city might be a warning sign of structural decline. Always pair cap rate with location, asset class, and your own investment strategy.
Cap Rate by Property Type (2026)
Cap rates vary significantly by property class and sector. The table below reflects national averages for stabilized assets as of mid-2026, based on aggregator data from JPMorgan, CBRE, and the Cauble Group's Q4 2025 / Q1 2026 market reports.
| Property Type | Class A | Class B | Class C |
|---|---|---|---|
| Multifamily | 4.5 - 6.0% | 5.5 - 7.0% | 6.0 - 8.5% |
| Industrial | 5.5 - 7.0% | 6.5 - 8.0% | 8.0 - 10.0% |
| Office | 6.0 - 8.0% | 7.5 - 9.5% | 9.0 - 11.0% |
| Retail (Strip / Grocery-Anchored) | 6.5 - 7.5% | 7.0 - 8.5% | 8.5 - 10.0% |
| Self-Storage | 5.5 - 6.5% | 5.5 - 6.5% | 7.0 - 9.0% |
| Single-Family Rental (SFR) | — | 5.5 - 7.0% | 7.5 - 9.5% |
| Short-Term Rental (STR) | — | — | 6.0 - 11.0% |
Source ranges synthesized from JPMorgan Q4 2025 Investor Survey, CBRE North America Cap Rate Survey H2 2025, and Tyler Cauble's Q1 2026 market commentary. Actual deal pricing varies by submarket; treat these as ballpark ranges, not underwriting inputs.
Notice the pattern: higher cap = higher risk or higher expected return. Class A multifamily trades at the lowest cap rates because new construction in supply-constrained urban cores is the safest bet — predictable rents, institutional tenants, professional management. Class C and value-add deals in secondary markets command higher caps because investors demand more return for taking on more risk.
What is a "Good" Cap Rate in 2026?
There's no universal answer. "Good" depends on the asset class, the submarket, your financing, and your strategy. But here are the working rules most institutional and experienced investors use:
- 5-7% is the typical range for stabilized residential and industrial in primary markets. You should expect appreciation to do a lot of the heavy lifting on total return.
- 7-9% is common for Class B/C multifamily, value-add deals, and secondary markets. Often paired with some renovation or operational improvement upside.
- 9-12% signals either higher risk (workforce housing, older product, tertiary markets) or significant value-add potential. Be skeptical of cap rates this high without a clear thesis.
- 12%+ often signals distress, deferred maintenance, lease-up risk, or a thin market with limited buyer depth. Verify every input before you underwrite.
The bigger point: a "good" cap rate for a stabilized Class A building in Boston is 4.5%. The same number in Memphis would be a screaming deal — and that's exactly the principle. Don't compare cap rates across geographies without adjusting for risk profile, rent growth prospects, and exit market liquidity.
For more detail, see our full Cap Rate 2026 guide, which covers the Gordon Model, cap rate compression/expansion, and how to read market cap rate reports.
Cap Rate vs Rental Yield vs Cash-on-Cash
"Cap rate," "yield," and "cash-on-cash return" get used interchangeably, but they're not the same metric. Here's the comparison:
| Metric | Formula | Includes Financing? | Best For |
|---|---|---|---|
| Cap Rate | NOI ÷ Property Value × 100 | No | Comparing deals, market analysis, valuations |
| Gross Yield | Gross Rent ÷ Property Value × 100 | No | Quick screening (ignores vacancy + opex) |
| Net Yield | NOI ÷ Property Value × 100 | No | Same as cap rate; common in residential / international markets |
| Cash-on-Cash Return | (NOI − Debt Service) ÷ Cash Invested × 100 | Yes | Measuring actual return on your out-of-pocket cash |
The key distinction: cap rate and net yield ignore financing; cash-on-cash includes it. That means cash-on-cash can be much higher than cap rate (good leverage amplifies returns) or lower (bad leverage or low cap rate at high prices).
For a deeper comparison, see NOI vs Cap Rate vs Cash-on-Cash: Which Return Metric to Use.
Cap Rate FAQ
What is a cap rate?
A cap rate (capitalization rate) is a property's net operating income divided by its purchase price, expressed as a percentage. It estimates the unleveraged annual yield on a rental property.
What is a good cap rate in 2026?
"Good" depends on asset class and location. In 2026, Class A multifamily trades around 4.5-6.0%, industrial around 5.5-7.0%, retail around 6.5-8.0%, and Class C multifamily around 7.0-9.0%. The right answer depends on the submarket and your investment strategy.
Is cap rate the same as yield?
Cap rate and net yield are mathematically identical (both = NOI ÷ property value × 100). "Cap rate" is the term used in US commercial real estate; "yield" is more common in residential and international markets. Gross yield, by contrast, uses gross rent instead of NOI and produces a higher (and less accurate) number.
Does cap rate include mortgage payments?
No. Cap rate is calculated using NOI, which explicitly excludes mortgage principal and interest. To see the impact of financing, calculate cash-on-cash return instead.
Why do sellers prefer high cap rates?
Buyers do. A high cap rate means the property is yielding more relative to its price — which means either the price is low or the income is high. Sellers don't prefer high caps; they prefer low caps because low caps correspond to higher sale prices for a given NOI.
Can I use cap rate to negotiate price?
Yes — this is exactly how it's used. If comparable properties in the area trade at 6% caps and the seller is asking a price that implies a 4.5% cap, you have data to push back. Calculate the price that would yield a market cap rate and use that as your anchor.
Important Disclaimer
This cap rate calculator provides estimates for educational and informational purposes only. Results are based on the inputs you provide and standard real estate formulas; they are not a guarantee of investment performance, cap rate compression/expansion, or returns. Actual property values, rents, vacancy rates, and operating expenses depend on local market conditions, asset condition, lease terms, and management quality.
This site is not a real estate broker, lender, or financial advisor. We do not collect personal information, run credit checks, or make investment decisions. For personalized investment analysis, consult a licensed real estate professional in your state.