How it works
NOI = gross rental income − vacancy loss − operating expenses. Cap rate = annual NOI / property value × 100.
Input definitions
- Annual gross rental income
- Enter the value in the labeled unit.
- Annual vacancy and credit loss
- Enter the value in the labeled unit.
- Annual operating expenses
- Enter the value in the labeled unit.
- Property purchase price or value
- Enter the value in the labeled unit.
A worked example
- Annual gross rental income
- 24000
- Annual vacancy and credit loss
- 1000
- Annual operating expenses
- 7000
- Property purchase price or value
- 200000
Assumptions & limits
One currency and annual amounts. Enter property taxes and operating insurance in expenses, but exclude mortgage principal and interest. No local rents or valuations are fetched.
Sources & review
Maintained by AnsRio. Methods and examples use automated checks; this does not imply independent professional certification.
Method updated 2026-10-17. Content checked against the stated method and examples. Our verification approach.
Common questions
Does cap rate include mortgage payments?
No. Capitalization rate uses net operating income before financing, depreciation and personal income tax. Include property-level operating expenses such as maintenance, property taxes and insurance.
Are these investment and borrowing results guaranteed?
No. These are deterministic estimates from the inputs and stated method, not predicted returns or lending offers. Actual fees, tax, timing and contractual terms may differ.
How does the Rental property capitalization rate tool work?
NOI = gross rental income − vacancy loss − operating expenses. Cap rate = annual NOI / property value × 100.
What are the assumptions and limits of Rental property capitalization rate?
One currency and annual amounts. Enter property taxes and operating insurance in expenses, but exclude mortgage principal and interest. No local rents or valuations are fetched.