Compare properties at a glance — independent of financing
Enter your property price, income, and expenses to calculate cap rate, NOI, and price targets at different return thresholds. See how the same property looks at 5%, 6%, 7%, and 8% cap rates.
Enter your deal numbers below. Results update instantly.
Cap Rate
7.80%
Price targets at different cap rates
$780,000
$650,000
$557,143
$487,500
Free — includes cash flow, DSCR, scenarios & reports
Cap rate strips out financing so you can compare any two properties on equal footing.
Start with gross rental income. Subtract vacancy (typically 5–8%), then subtract all operating expenses: property taxes, insurance, maintenance, management, and reserves. Do not subtract mortgage payments — NOI is a pre-financing number.
Cap Rate = NOI ÷ Price. A $300,000 property with $21,000 NOI has a 7.0% cap rate. This tells you the property yields 7 cents of income for every dollar of value — regardless of how you finance it.
Use cap rate to compare properties in different markets. Or work backwards: Price = NOI ÷ Target Cap Rate. If you need a 7% return, and NOI is $21,000, don't pay more than $300,000.
The capitalization rate (cap rate) is the most widely used metric for comparing investment properties. It answers a simple question: "How much income does this property produce relative to its price?"
NOI ÷ Property Price
Net Operating Income divided by the property's purchase price or current market value.
Gross Income − Vacancy − Operating Expenses
Annual income after vacancy and expenses, but before mortgage payments.
NOI ÷ Target Cap Rate
Work backwards to find what price yields your target return.
Cap rate only works if your NOI estimate is honest. If you understate vacancy or leave out real operating expenses, the cap rate will look stronger than the deal actually is. For a deeper breakdown of what belongs in NOI, read What Is NOI in Real Estate?.
| Property Type | Typical Cap Rate | Risk Level |
|---|---|---|
| Class A Multifamily (major metro) | 4.0–5.5% | Lower |
| Single Family Rental | 5.0–7.0% | Moderate |
| Small Multifamily (2–4 units) | 5.5–8.0% | Moderate |
| Value-Add / Secondary Market | 7.0–10.0% | Higher |
| Self-Storage / Industrial | 6.0–9.0% | Varies |
Cap rate is a starting point, not the whole story. A full analysis also considers cash flow after financing, DSCR, rent growth projections, and downside scenarios — all of which DealForge calculates automatically.
NOI stands for Net Operating Income. It is the property’s income after vacancy and operating expenses, but before mortgage payments and taxes. Cap rate starts with NOI, so if your NOI estimate is wrong, your cap rate is wrong too.
Cap rate (capitalization rate) measures a property’s annual net operating income as a percentage of its purchase price. It shows what return you’d earn if you paid all cash — no financing. Formula: NOI ÷ Property Price.
It depends on the market and property type. In 2026, most residential investors target 5–8% cap rates. Class A properties in major metros trade at 4–5%. Value-add or smaller market deals often hit 7–10%. Higher cap rate = higher income yield, but usually higher risk.
Cap rate ignores financing — it measures the property’s unlevered return. Cash-on-cash return factors in your mortgage, showing the return on your actual cash invested. A deal can have a 6% cap rate but a 10% cash-on-cash return if leverage is favorable.
No. Cap rate is calculated before financing costs. It only considers NOI (income minus operating expenses) divided by property price. This makes it useful for comparing properties regardless of how they’re financed.
Yes, if operating expenses exceed income (negative NOI). This can happen with vacant properties or heavy renovation projects. A negative cap rate means the property loses money before any financing costs.
Explore other metrics with these focused investment tools.
Cap rate is just the beginning. DealForge gives you full deal analysis with cash flow projections, DSCR calculations, scenario modeling, and lender-ready reports — all in one platform.
Create Free AccountFree to use — no credit card required