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Real Estate Calculators

Cap Rate Calculator

Verified formula Updated Jun 2026 Private — runs on your device

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Verified formula Private

Capitalization rate

5.00%

For general information only — not financial, tax, legal or medical advice. Verify before you rely on it.

How to use the Cap Rate Calculator

The Cap Rate Calculator works out your capitalization rate in an instant. Enter net operating income (annual) and property value and the result updates as you type — it is free, needs no sign-up, and runs entirely in your browser so your figures stay private.

  1. Enter the net operating income (annual).
  2. Enter the property value.
  3. Read off your capitalization rate — the calculator updates automatically, with no button to press.

Formula

The Cap Rate Calculator uses the formula:

Capitalization rate = Net operating income (annual) ÷ Property value × 100

Worked example

For example, with net operating income (annual) of ₹500,000 and property value of ₹10,000,000, the capitalization rate is 5.00%.

Inputs used
Net operating income (annual) ₹500,000
Property value ₹10,000,000
Results
Capitalization rate 5.00%

Results are estimates for educational use, not professional advice.

Key terms explained

Net operating income
Rental income minus operating expenses, before mortgage and tax (NOI).
Cap rate
Capitalization rate — net operating income as a percentage of a property's value.

Frequently asked questions

The capitalization rate is annual net operating income divided by property value, as a percentage. 5,00,000 NOI on a 1,00,00,000 property is a 5% cap rate.

It depends on location and risk. Higher cap rates suggest higher returns but often higher risk; prime, low-risk properties have lower cap rates.

NOI is rental income minus operating expenses, before mortgage payments and tax. Use the annual figure for the cap rate.

No. Cap rate ignores financing, so two buyers of the same property at the same price get the same cap rate regardless of their loans.

The Cap Rate Calculator uses the formula: Capitalization rate = Net operating income (annual) ÷ Property value × 100. For example, with net operating income (annual) of ₹500,000 and property value of ₹10,000,000, the capitalization rate is 5.00%.

Enter the net operating income (annual). Enter the property value. Read off your capitalization rate — the calculator updates automatically, with no button to press.

What Is a Good Cap Rate?

For rental property, a capitalisation (cap) rate of roughly 5–10% is generally considered good, with many investors targeting around 8%. A higher cap rate means more income relative to price — but often more risk. What's 'good' depends on the market and property type.

1 min read

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