liminfoCap Rate Calculator
Free web tool: Cap Rate Calculator
Cap Rate
6.00%
About Cap Rate Calculator
The Cap Rate Calculator is a free, browser-based real estate investment tool that computes capitalization rate (cap rate), property value, and required Net Operating Income (NOI) for income-producing properties. Cap rate is the most fundamental metric in commercial real estate valuation: it measures the annual return an investor can expect relative to the purchase price, expressed as a percentage. A higher cap rate generally indicates higher return and higher risk, while a lower cap rate suggests lower risk and is common in premium markets.
This calculator offers three distinct modes. In Cap Rate mode, you enter the annual Net Operating Income (NOI) and the purchase price; the tool divides NOI by price to yield the cap rate percentage. In Property Value mode, you enter the NOI and your target cap rate, and the calculator inverts the formula (Value = NOI / Cap Rate) to determine what a property is worth given your return expectations. In Required NOI mode, you enter the purchase price and target cap rate to compute the minimum annual income the property must generate to justify the investment.
Real estate investors, commercial brokers, property appraisers, and financial analysts rely on cap rate calculations daily to compare properties across different markets, evaluate acquisition opportunities, and set pricing. Because all three calculations run entirely within your browser, your property data and financial figures stay completely private. The tool supports dark mode and works on desktop, tablet, and mobile devices.
Key Features
- Three-mode calculation: Cap Rate, Property Value, and Required NOI in one tool
- Cap Rate formula: NOI / Purchase Price × 100 for instant yield percentage
- Property Value formula: NOI / Cap Rate to determine market value from income
- Required NOI formula: Purchase Price × Cap Rate to set minimum income targets
- Real-time results — switch modes and adjust inputs to compare scenarios instantly
- Handles large property values with locale-formatted currency output
- 100% client-side processing — property data never leaves your browser
- Dark mode support and fully responsive design for all screen sizes
Frequently Asked Questions
What is a cap rate in real estate?
Cap rate (capitalization rate) is the ratio of a property's Net Operating Income (NOI) to its current market value or purchase price, expressed as a percentage. It represents the unleveraged annual return on a real estate investment, ignoring mortgage financing. A property generating 60,000,000 won in NOI purchased for 1,000,000,000 won has a cap rate of 6%.
What is a good cap rate?
A "good" cap rate depends on the market, asset class, and investor's risk tolerance. In major urban markets, cap rates for prime commercial properties often range from 3% to 5%, while secondary markets or higher-risk assets might see 6% to 10% or more. Investors seeking stable, low-risk returns accept lower cap rates, while value-add or opportunistic investors target higher rates.
What is NOI (Net Operating Income)?
NOI is the annual income generated by a property after deducting operating expenses but before subtracting mortgage payments or taxes. It is calculated as: Gross Rental Income − Vacancy Loss − Operating Expenses (maintenance, insurance, property management, utilities). NOI does not include capital expenditures or debt service.
How is cap rate different from cash-on-cash return?
Cap rate is an unlevered return metric that ignores financing — it only considers NOI and purchase price. Cash-on-cash return measures the actual cash income relative to the cash invested (down payment), so it accounts for mortgage debt service. Two properties with the same cap rate can have very different cash-on-cash returns depending on financing terms.
Can I use cap rate to determine property value?
Yes. If you know the property's NOI and a market-appropriate cap rate, you can estimate value using: Property Value = NOI / Cap Rate. This is the income approach to real estate valuation, widely used by appraisers and investors. For example, a property with 60,000,000 won NOI valued at a 6% cap rate is worth 1,000,000,000 won.
How do I calculate the required NOI for a target return?
In Required NOI mode, enter the purchase price and your target cap rate percentage. The calculator multiplies Price × Cap Rate to tell you the minimum annual NOI the property needs to generate to hit your return target. This is useful when evaluating a specific property to determine if the rental income is sufficient.
Does cap rate include mortgage payments?
No. Cap rate is calculated on the full property value without regard to how it is financed. It is an unleveraged metric. If you need a return metric that includes financing, look at cash-on-cash return or equity yield instead. This is why two investors with the same cap rate property can experience different actual returns based on their loan terms.
Is this calculator free to use?
Yes, the Cap Rate Calculator is completely free with no usage limits and no account required. All three calculation modes run locally in your browser, so your property values and NOI figures are never uploaded to any server or stored anywhere.