How do I calculate rental property NOI and cap rate?
Effective income = gross rent and other income × (1 − vacancy rate). NOI = effective income − operating expenses. Cap rate = NOI / property price; target price = NOI / target cap rate.
Money & mortgage
Rental property cap rate calculator
Calculate effective income, net operating income, cap rate, and a target purchase price without financing costs.
- USD inputs · transparent calculation assumptions
- Instant updates as inputs change
- Data is calculated in this browser only
Cap rate excludes financing, capital expenditures, depreciation, and income tax.
Property capitalization rate4.73%
- Potential gross income
- $30,000.00
- Vacancy allowance
- $1,500.00
- Effective gross income
- $28,500.00
- Net operating income (NOI)
- $21,300.00
- Price at target cap rate
- $304,285.71
Calculation notes
Understand the Rental property cap rate calculator
Effective income = gross rent and other income × (1 − vacancy rate). NOI = effective income − operating expenses. Cap rate = NOI / property price; target price = NOI / target cap rate. The calculation runs locally and keeps cash-flow timing consistent with the stated assumptions.
What NOI remains from $30,000 rent at 5% vacancy and $7,200 expenses?
$30,000 gross rent plus no other income at 5% vacancy yields $28,500 effective income. After $7,200 expenses, NOI is $21,300.
Why does cap rate exclude mortgage payments?
- Cap rate excludes mortgage payments so properties can be compared independent of financing.
- A target cap rate is a required-return assumption, not a market valuation guarantee.
How do I reverse a target cap rate into a purchase price?
- Operating expenses should exclude debt service, depreciation, capital expenditures, and income tax. This model does not forecast rent growth, resale value, financing, or local market risk.
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