Enter your details and click "Calculate" to see your Cap Rate
What This Calculator Does
This calculator determines the capitalization rate (cap rate) by dividing Net Operating Income by property price. Cap rate is a key metric for comparing investment properties regardless of financing.
Who Is This For
Real estate investors comparing multiple properties, buyers evaluating commercial or multi-family investments, and anyone analyzing Miami investment opportunities.
How It Works
Enter the property price, annual rental income, and annual operating expenses. The calculator will show your Net Operating Income and Cap Rate percentage.
Frequently Asked Questions
What is a good cap rate?
Cap rates vary by location and property type. In Miami, 4-6% is typical for prime locations, while 7-10% may be found in emerging areas. Higher cap rates often indicate higher risk.
What is Net Operating Income (NOI)?
NOI is your annual rental income minus operating expenses (taxes, insurance, maintenance, management). It does not include mortgage payments or depreciation.
Why does cap rate matter?
Cap rate helps compare properties regardless of financing. It shows the unlevered return you would earn if you paid all cash, making it easy to compare different investments.
What is the relationship between cap rate and price?
Cap rate and price are inversely related. As prices rise, cap rates compress. A lower cap rate means you are paying more per dollar of income, often in exchange for lower risk or better location.