Click Going-in cap rate above to trace the formula and the NOI behind it.
NOI build-up worksheet
Effective gross income, minus each operating expense, down to net operating income: the number that drives the cap rate.
Reverse solver: what's it worth?
At a target cap rate, value = NOI ÷ cap rate. Enter the rate comparable sales trade at to price this property off its income.
Same NOI, recomputed at nearby purchase prices. Your current price is highlighted.
| Purchase price | Cap rate |
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Common questions
How is cap rate calculated?
Cap rate = annual net operating income ÷ price. This calculator builds NOI for you: effective gross income (rent minus vacancy, plus any other income) minus operating expenses, namely taxes, insurance, HOA, utilities, management, and maintenance. It then divides by the purchase price (the going-in cap) or by a current market value (the market cap). Click the result to see every number filled in.
Does cap rate include the mortgage?
No. Cap rate is net operating income ÷ price, and NOI excludes debt service entirely; it also excludes income tax, depreciation, and one-time rehab. Cap rate measures the property itself, independent of how you finance it. Subtracting the mortgage would give you cash flow, not a cap rate, so this calculator never lets financing touch the number.
Should the capex reserve be inside or outside NOI?
Both conventions are common, so this calculator has a toggle. The appraisal-pure cap rate excludes the capex reserve (it treats capital replacements as below-the-line). The investor cap rate includes the reserve as an operating expense, which is more conservative. The worksheet always stamps which convention produced the number you see.
What is the difference between going-in cap and market cap?
Going-in cap divides NOI by the price you are paying: your actual yield on cost at purchase. Market cap divides the same NOI by the property's current market value. When you pay below market, your going-in cap is higher than the market cap; the gap is instant equity. Enter both a purchase price and a market value to see the two side by side.
How does the reverse solver (implied value) work?
Rearrange the formula: if cap rate = NOI ÷ value, then value = NOI ÷ cap rate. Enter the cap rate that comparable sales are trading at and the calculator returns what this property is worth at that rate given its NOI. It is the fastest way to price a deal off the income it produces.
Can I enter rent and expenses yearly or monthly?
Yes. Every income and expense line has a yearly/monthly toggle, and management, maintenance, capex and vacancy can also be entered as a percent of rent. Enter each item however you have it and the calculator converts it; the equivalent figure is echoed right under the field.