Cap Rate Calculator

The capitalization rate (cap rate) is the most fundamental metric in commercial real estate investing. It measures a property's unlevered return — what you'd earn if you paid cash with no mortgage. Cap rate equals Net Operating Income (NOI) divided by the property's purchase price or current market value.

A higher cap rate means a higher unlevered yield and typically more risk. Market cap rates vary by property type and location: Class A multifamily in gateway markets may trade at 4–5%, while workforce housing in secondary markets might transact at 7–9%. Always compare against your submarket benchmark — a 6% cap rate in Dallas is not the same as a 6% cap in San Francisco. Use this calculator to quickly verify any deal or back-solve for price.