Cap Rate Calculator (2026)
Evaluate investment properties instantly. Calculate Capitalization Rate, reverse-engineer maximum purchase prices, or determine required Net Operating Income (NOI).
Calculate yield based on the property price and its net operating income.
Find the maximum price you should pay to hit your target cap rate.
Find out how much income a property must generate to justify its price.
Calculation Results
Based on your inputs
*Cap rate evaluates unlevered returns (no mortgage). It does not reflect cash-on-cash return.
How to Calculate Cap Rate (The Formula)
If you're wondering how to calculate cap rate in real estate, it is actually one of the simplest math formulas in the industry. The calculate cap rate formula relies on just two numbers:
- Determine Net Operating Income (NOI): This is your gross rental income minus all operating expenses (property taxes, insurance, management fees, maintenance, vacancy reserves). Crucially, do not subtract your mortgage payment!
- Determine Property Value: This is the asking price, or the total cost of acquisition.
- Divide: Divide NOI by the property value, and multiply by 100 to get a percentage.
Rental Property Cap Rate Calculator vs Commercial
A rental property cap rate calculator works exactly the same as a commercial one, but the benchmarks for what constitutes a "good" cap rate differ wildly.
- Single Family Rentals (SFR): Home values are driven by emotional owner-occupants, not investors. Because of this, SFR cap rates are notoriously low, often hovering between 3% and 5%. If you are using our calculator on a single-family home, don't be surprised if the yield looks terrible compared to commercial real estate.
- Commercial (Multifamily, Retail, Office): Commercial buildings are valued strictly on the income they produce. Therefore, commercial cap rates are heavily tied to the bond market (specifically the 10-Year Treasury) and the inherent risk of the tenant class.
For smaller investors, evaluating a duplex or triplex will often yield a 6% to 8% cap rate in the Midwest, and a 4% to 5% cap rate on the coasts.
2026 Real Estate Cap Rate Benchmarks
When you calculate cap rate on rental property or commercial buildings, the resulting percentage is meaningless unless you compare it to the current market. Here is what investors are currently expecting in 2026 based on asset class and location quality.
| Property Type | Primary Markets (Tier 1) | Secondary / Tertiary Markets |
|---|---|---|
| Multifamily (Apartments) | 4.50% – 5.50% | 5.75% – 7.25% |
| Industrial / Logistics | 4.75% – 5.75% | 6.00% – 7.50% |
| Retail (Grocery Anchored) | 5.50% – 6.50% | 6.75% – 8.25% |
| Office Buildings | 7.00% – 8.50% | 8.75% – 10.50%+ |
| Self Storage | 5.25% – 6.00% | 6.25% – 7.50% |
Why do cap rates change? Cap rates expand (go up) when federal interest rates rise, and compress (go down) when federal rates fall. See our live 10-Year Treasury tracker in the sidebar.
Clarification: Cap Rates vs. Interest Rate Caps (Chatham)
If you were searching for a chatham rate cap calculator or a chatham financial rate cap calculator, you are likely looking for an Interest Rate Cap, which is an entirely different financial tool than a real estate Capitalization Rate.
Interest Rate Cap (Derivatives): A financial insurance policy (often sold by advisory firms like Chatham Financial) that commercial borrowers buy to cap the maximum interest rate on a floating-rate loan (like SOFR).
If you need to calculate the premium for an interest rate cap derivative, you will need a specialized Black-Scholes or Hull-White pricing model, not a real estate calculator!