Cap Rate Calculator
Gauge any investment property and rank it against the field using the capitalization rate.
What This Calculator Does
By dividing Net Operating Income by the property price, the calculator produces the capitalization rate — a metric untouched by financing that lets you strip away the noise and compare properties on equal footing.
Who Is This For
For investors lining up several properties at once, buyers underwriting commercial or multi-family deals, and anyone researching Miami investments who wants an objective yardstick of performance.
How It Works
Enter the property price, the total rent collected in a year, and the annual operating expenses. The calculator works out your Net Operating Income and shows the resulting Cap Rate as a percentage.
Frequently Asked Questions
What is a good cap rate?
Good depends on where the property sits and what type it is. In Miami, prime addresses usually fall in the 4-6% range, while up-and-coming areas can return 7-10%. Broadly speaking, a higher cap rate signals higher risk.
What is Net Operating Income (NOI)?
NOI is the figure left once you take gross annual rental income and remove every operating expense — taxes, insurance, maintenance, and management fees. It leaves out mortgage payments and depreciation entirely.
Why does cap rate matter?
Since financing plays no part, cap rate delivers a clean apples-to-apples read across properties. It captures the all-cash yield the asset would generate, which is why it is the default gauge for comparing competing deals.
What is the relationship between cap rate and price?
Cap rate and price pull against each other — as prices rise, cap rates compress. A lower cap rate tells you that you are paying a premium against the income the property throws off, usually the trade-off for lower risk or a more sought-after location.