Cap Rate Calculator
Assess any investment property and measure it against the field through its capitalization rate.
What This Calculator Does
The calculator arrives at the capitalization rate by dividing Net Operating Income by the property price — a financing-independent measure that cuts through the noise and lets you compare investment properties on truly equal footing.
Who Is This For
For investors weighing several properties at once, buyers underwriting commercial or multi-family acquisitions, and anyone exploring Miami investment opportunities who wants one objective yardstick of performance.
How It Works
Enter the property price, the total annual rental income, and the annual operating expenses. The calculator computes your Net Operating Income and presents the resulting Cap Rate as a percentage.
Frequently Asked Questions
What is a good cap rate?
What qualifies as good moves with location and asset type. In Miami, prime locations usually settle in the 4-6% range, while emerging neighborhoods can deliver 7-10%. As a general principle, a higher cap rate signals higher risk.
What is Net Operating Income (NOI)?
NOI is what's left once you subtract every operating expense — taxes, insurance, maintenance, and management fees — from gross annual rental income. Mortgage payments and depreciation stay out of the equation.
Why does cap rate matter?
By removing financing from the picture, cap rate delivers a clean, like-for-like comparison across properties. It captures the all-cash yield the asset would produce, which is exactly why it's the metric investors reach for when weighing competing deals.
What is the relationship between cap rate and price?
Cap rate and price travel in opposite directions — as prices rise, cap rates contract. A lower cap rate tells you that you're paying a premium relative to the income the property generates, usually in exchange for lower risk or a more coveted location.