Enter your property details and click Calculate to see your cap rate and investment metrics.
Cap rate — short for capitalization rate — is the most commonly used metric in real estate investing. It tells you how much annual income a property earns as a percentage of its value, without factoring in how you financed it.
A property worth $500,000 that produces $35,000 in net operating income per year has a cap rate of 7%. That means you would earn back 7% of your investment each year through income alone — before any appreciation. To see how much a property could grow in value over time on top of that income, appreciation calculator estimates long-term value growth based on historical or custom rates.
Cap rate is useful for quick comparisons between properties or markets, setting purchase prices, and measuring risk. A lower cap rate usually means a safer, more stable investment. A higher cap rate often means more income — but more risk too.
The calculation is straightforward:
Example: Property value $400,000. Gross rent $36,000/yr. Vacancy 5% = $1,800 loss. EGI = $34,200. Expenses 35% = $11,970. NOI = $22,230. Cap Rate = 22,230 ÷ 400,000 = 5.56%
Note: Operating expenses include property taxes, insurance, maintenance, management fees, and HOA — but not mortgage payments. If you want to see what rental income actually puts in your pocket after tax, use take home calculator to estimate your net income after deductions.
These are approximate market averages for residential rental properties. Actual rates vary by neighborhood, property type, and current market conditions.
| City / Metro | Market Type | Typical Cap Rate | Median Home Price | Price-to-Rent Ratio |
|---|
Shows annual NOI ($) for a property with $48,000 gross annual rent at various vacancy and expense combinations.
| Vacancy Rate | Exp 25% | Exp 30% | Exp 35% | Exp 40% | Exp 45% | Exp 50% |
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Find the cap rate for different combinations of property value and annual NOI.
Approximate average gross rental yields for major global real estate markets. Net cap rates are typically 1–3 percentage points lower after expenses.
| Country | Major City Example | Gross Yield (avg) | Est. Net Cap Rate | Market Note |
|---|---|---|---|---|
| United States | Various | 4% – 8% | 3% – 6% | Varies widely by market |
| United Kingdom | London / Manchester | 3% – 6% | 2% – 4% | London yields compressed |
| Germany | Berlin / Munich | 2% – 4% | 1.5% – 3% | Strict tenant protection laws |
| Australia | Sydney / Melbourne | 3% – 5% | 2% – 4% | Strong capital growth markets |
| Canada | Toronto / Vancouver | 3% – 5% | 2% – 3.5% | High prices suppress yields |
| Japan | Tokyo / Osaka | 4% – 7% | 3% – 5% | Stable demand, aging stock |
| UAE | Dubai / Abu Dhabi | 5% – 9% | 4% – 7% | No property tax; high yields |
| India | Mumbai / Bangalore | 2% – 4% | 1.5% – 3% | Capital appreciation focus |
| Brazil | São Paulo / RJ | 5% – 9% | 4% – 7% | Higher risk, higher yield |
| South Africa | Cape Town / JHB | 7% – 12% | 5% – 9% | Risk premium for currency |
Source: General market research. Figures are illustrative averages and change with market conditions.
Shows annual cash-on-cash return (%) for different down payment percentages and annual NOI amounts. Assumes a 30-year mortgage at 7% on the financed portion.
Cash-on-cash return = Annual pre-tax cash flow ÷ Total cash invested. Assumes 7% mortgage rate, 30-year term.