Cap Rate Calculator

If you're an investor in real estate and want to know how much ROI (Return on Investment) you will get from the property you will own, then this cap rate calculator is made for you.

What is the cap rate?

The ratio between your net operating system over the property value is known as the cap rate.

Or in other words

The Cap rate is defined as the return on investment in real estate property. It portrays what you get in return on investment each year.

 

For instance,

Suppose you bought a house for $100,000 (One Hundred Thousand Dollars), and 10% is the cap rate of property you own. It indicates that every year, you will get 10% of your original investment back, and after ten years, you will get started earning profit from the property you made.

Formula of Cap Rate Calculator

To get the evaluating percentage of your investment, you can use our cap rate calculator or can find it manually by using the formula listed below;

 

cap rate = net income / property value

Whereas,

Net income

 is equal to the revenue you're generating after excluding all expenses (if any).

Property value

 is the price you will get on selling the property.

To find the net income, you can use the formula listed below;

Net income = (100 - operating expenses)[%] × (100 - vacancy rate)[%] × gross income

Example

For a more precise understanding of the cap rate concept, let's solve an example together.

Suppose a house having selling value equals $200,000 (Two Hundred Thousand Dollars), and the net profit/ income you're getting from that house is $23520. Then, find the cap rate you're getting each year from this property.

Solution

Given Data

Net income = $23520
Property value = $200,000

To find,

Cap rate = ?

Formula

Cap rate = net income/property value

Putting values

Cap rate = $23520 / $200000
Cap rate = 11.76%

Calculator use

To find the ROI you can get from your property, just put the required values in our cap rate calculator. After in few seconds, the answer will appear on the screen.