Does Cap Rate include mortgage payments?

No. Capitalization Rate intentionally excludes mortgage debt service so you can compare the pure operational earning power of properties regardless of financing structure.

Updated: August 2026 • Verified v1.2

Real Estate Cap Rate & Net Operating Income (NOI) Calculator

Finance & MathPopular

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NOI = (Gross_Rent * (1 - Vacancy)) - Operating_Expenses; Cap_Rate = (NOI / Property_Price) * 100; GRM = Price / Gross_Rent

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Understanding Your Results

Calculates Effective Gross Income, Net Operating Income (NOI), unleveraged Cap Rate percentage, Gross Rent Multiplier (GRM), and the 1% rule ratio.

Practical Guidance & Next Steps

A Cap Rate of 6% to 10% is generally considered attractive in most residential rental real estate markets.

What is this?

A real estate valuation utility that models property capitalization rates and net operating income.

How does it work?

1. Enter property purchase price and annual rental revenue. 2. Enter vacancy buffer percentage and annual operating expenses. 3. View Cap Rate %, annual NOI, Gross Rent Multiplier, and 1% rule metric.

Why use it?

Quickly screens real estate deals to determine which properties generate the highest cash flow return on capital.

Technical Scope & Calculation Limitations

Calculates unleveraged property returns excluding debt service and mortgage financing.

Frequently Asked Questions

Generally, Cap Rates between 6% and 10% are considered strong for residential properties. High-demand prime urban locations often trade at 4% to 5%, while higher-risk secondary markets may reach 10% to 12%.

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