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 the 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.
Table of Contents
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
Note:
To know about the average rate of change, you can use our Average Rate Of Change Calculator.
Example
For a more precise understanding of the cap rate concept, let's solve an example together.
Suppose a house has a selling value equal to $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.
Given data
Net income = $23520
Property value = $200,000
To Find
Cap rate = ?
Solution
Cap rate = net income/property value
Now by putting the values in the formula, we will get:
Cap rate = $23520 / $200000
Cap rate = 11.76%
How to use Cap Rate Calculator?
The steps to use the cap rate calculator are as follows:
Step 1: Enter the value of the property in the first required input.
Step 2: Enter the value of annual gross income in the second required input.
Step 3: Enter the value of operating expenses in the third required input.
Step 4: Enter the value of the vacancy rate in the fourth required input.
Step 5: The calculator will automatically display an answer on the screen.
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.
