Capitalization Rate Results
| Metric | Value | Percentage |
|---|---|---|
| Gross Rent | $0 | 100% |
| Vacancy Loss | $0 | 0% |
| Effective Gross Income | $0 | 0% |
| Operating Expenses | $0 | 0% |
| Net Operating Income | $0 | 0% |
Investment Analysis
The Cap Rate Calculator helps you figure out how profitable a real estate property is. It uses the net income from the property and the current market value to find out the percentage return. This is useful for investors who want to know if a rental property is a good investment.
What is Cap Rate?
Cap rate stands for Capitalization Rate. It is a simple way to measure how much return you can expect on a real estate investment. The cap rate compares the yearly net operating income (NOI) of the property to its value or purchase price.
Cap Rate Formula
Cap Rate = (Net Operating Income ÷ Property Value) × 100
The result is shown as a percentage. A higher percentage means a better return on your money.
Why Use a Cap Rate Calculator?
- Quickly check how profitable a property is
- Compare different real estate investments
- Easy to use for both beginners and experts
- Helps with better decision-making in property buying
Example
If a property earns $20,000 in net income each year, and its market value is $250,000:
Cap Rate = (20,000 ÷ 250,000) × 100 = 8%
This means the investor is earning an 8% return on the property value each year.
How to Use the Cap Rate Calculator
- Enter the Net Operating Income (NOI) of the property
- Enter the current market value or purchase price
- The calculator will show the cap rate instantly
What is a Good Cap Rate?
Cap rates usually range between 4% and 10%. A lower cap rate often means the property is in a safer, more stable area. A higher cap rate may mean more risk, but possibly more return. It depends on your goals and comfort with risk.
Conclusion
The Cap Rate Calculator is a helpful tool for anyone thinking about buying rental property. It gives a clear picture of how much income you can expect from your investment. Use it to compare properties, plan your investment, and make smarter choices.