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Cap Rate & NOI Calculator

Analyze the true structural cash-flow profile of an investment property before you leverage it with debt.

Stop buying cash-flow negative investment properties. Run the Net Operating Income (NOI) first.

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The Foundation of Commercial Real Estate

When assessing properties, serious investors look past the sticker price entirely and focus on two metrics: Net Operating Income (NOI) and Capitalization Rate.

NOI = Annual Gross Rental Income - Annual Operating Expenses

Cap Rate = (NOI / Property Value) * 100

How it’s used

You enter the total purchase price, the expected gross monthly rent, and all operational expenses (HOAs, taxes, insurance, routine maintenance) except for your mortgage payment.

Why it matters

The Cap Rate calculates the unleveraged rate of return of the asset itself. Because financing terms (mortgages) vary wildly from buyer to buyer, Cap Rate allows you to compare the profitability of a duplex in Ohio directly against an apartment complex in Texas, apples to apples, as if you bought both in pure cash.

Frequently Asked Questions

NOI is all the revenue from the property minus all reasonably necessary operating expenses (taxes, insurance, maintenance). It specifically excludes your mortgage debt service, as loans are tied to the investor, not the building.
Typically, 4% to 8%. A lower cap rate (4%) often signifies 'safer' Class A properties in major cities with high appreciation potential. A higher cap rate (8%+) suggests higher cash flow but usually in less desirable/riskier markets.

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