Cap Rate Calculator
Calculate capitalization rate (cap rate) and NOI for any rental property. Compare investment returns across markets.
Cap Rate as a Real Estate Investment Benchmark
Cap rate is the most fundamental metric in commercial and investment real estate. Unlike cash-on-cash return (which depends on your financing), cap rate gives you a financing-neutral view of a property's income-generating ability. This makes it ideal for comparing properties across different financing structures and for benchmarking against market cap rates in a given area.
In 2026, with mortgage rates hovering around 6.5-7%, cap rates below 5% often mean negative leverage — your borrowing cost exceeds your property return. Many investors in these markets rely primarily on appreciation rather than cash flow. In higher-yield markets where cap rates exceed financing rates, investors benefit from positive leverage and cash flow from day one.