How this calculator works
Estimate annual income after vacancy, then subtract property-level operating expenses. Exclude mortgage payments, income tax and depreciation from NOI. A known-NOI mode avoids entering the same income twice. Cap rate is an unlevered income yield at the entered value, not a forecast of the investor's total return.
Formula
NOI = gross income × (1 - vacancy) - operating expenses. Cap rate = NOI / property value. Property value = NOI / cap rate. Gross income = (NOI + expenses) / (1 - vacancy).
Worked example
A $600,000 property with $60,000 potential rent, 5% vacancy and $18,000 expenses earns $39,000 NOI. Its cap rate is 6.5%. At an 8% target cap rate, that NOI supports $487,500.
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Frequently asked questions
Do loan payments belong in expenses?
No. NOI is measured before debt service. Use cash-on-cash return to include financing.
Can cap rate be negative?
Yes. A loss-making property can have negative NOI and a negative income yield.
Is the value estimate an appraisal?
No. It assumes the selected cap rate is appropriate for the property, income stability and local market.