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Calculate capitalization rate from property price, rent, and annual operating costs.
Use this cap rate calculator to estimate how much income a rental property produces relative to its price. It helps investors compare deals quickly before adding financing, taxes, or more advanced underwriting assumptions. The calculator is designed to give a fast answer, but the quality of the answer still depends on accurate inputs and a clear idea of what decision you are trying to support.
- Enter Property Value, Monthly Gross Rent, and Annual Operating Costs using the same units you plan to compare or report.
- Read the main estimated cap rate first, then use the supporting outputs to understand the trade-offs behind that result.
- Compare your numbers with the worked examples below if you want a quick reasonableness check.
Gross yield gives a quick first-pass property screen, while net yield shows a more realistic picture after recurring operating costs. On this page, the primary output is estimated cap rate.
Scenario 1: $280,000 property with $1,900 monthly rent and $5,200 annual costs. Inputs used: propertyPrice: 280000, monthlyRent: 1900, annualCosts: 5200. Example result: 6.29%. This cap rate scenario works out to 6.29% after deducting operating costs from annual rent. Scenario 2: $410,000 property with $2,650 monthly rent and $8,400 annual costs. Inputs used: propertyPrice: 410000, monthlyRent: 2650, annualCosts: 8400. Example result: 5.71%. Even with higher rent, annual costs still matter, and this property lands at 5.71% cap rate.
Core formula: gross yield = annual rent / property price * 100; net yield = (annual rent - annual costs) / property price * 100. The calculator annualizes monthly rent, then compares that income with the property price before and after recurring operating costs.
- Gross yield ignores annual costs, while net yield includes them.
- Financing costs are usually evaluated separately from property operating yield.
Use this calculator when comparing rental properties, screening deals, or checking whether expected rent justifies the purchase price. Related paths for follow-up analysis include buy to let calculator, rental property calculator, rental yield calculator, and roi calculator.
Most bad outputs come from a few repeated input errors or interpretation mistakes. Use this short checklist before relying on the result.
- Ignoring annual costs and relying only on gross yield.
- Adding financing costs into an operating-yield comparison without a clear reason.
- Using peak or best-case rent instead of a realistic average monthly figure.
