Cap Rate Calculator

Calculate capitalization rate for real estate investments and analyze property returns

Calculate Cap Rate

£

Annual income minus operating expenses (before mortgage)

£

Current market value or purchase price

Cap Rate = (NOI / Property Value) x 100

Market Cap Rate Benchmarks

Residential
4% - 8%(typical: 5.5%)
Commercial
5% - 10%(typical: 7%)
Industrial
6% - 12%(typical: 8%)
Retail
5% - 9%(typical: 6.5%)
Multifamily
4% - 7%(typical: 5%)

Capitalization Rate

NOI / Property Value x 100
6.25%
Moderate Cap Rate

Balanced risk-return profile

Investment Summary

Net Operating Income£50,000
Property Value£800,000
Cap Rate6.25%

Investment Insights

Moderate Cap Rate: This represents a balanced investment with reasonable returns and manageable risk. Properties in this range are often in stable markets with reliable tenant demand.

Cap Rate Interpretation Guide

What is Cap Rate?

The capitalization rate (cap rate) measures the expected rate of return on a real estate investment property. It is calculated by dividing the Net Operating Income (NOI) by the property value or purchase price.

What is NOI?

Net Operating Income is the annual income generated by a property after deducting operating expenses (maintenance, insurance, property taxes, management fees) but before mortgage payments and capital expenditures.

Cap Rate Ranges

8%+ High

Higher returns but potentially higher risk

5-8% Moderate

Balanced risk-return, typical for many markets

3-5% Low

Prime locations with appreciation potential

Disclaimer: This calculator provides estimates for educational purposes only. Cap rates vary significantly by location, property type, and market conditions. Always conduct thorough due diligence and consult with real estate professionals before making investment decisions.