Free cap rate calculator
Enter the rent, the running costs and what the property would cost. Nestlytics works out net operating income and the cap rate — the yearly return the property itself produces, before any mortgage.
Cap rate compares the income a property produces on its own with the price of buying it:
Net operating income is a year's rent minus the property's operating costs — vacancy, management, maintenance, insurance, taxes, other expenses and your repair reserve. Mortgage payments, deposit and closing costs are left out on purpose, so two buyers with different financing can compare the same building fairly.
Take a property priced at €250,000.00 renting for €1,800.00 a month, with €120.00 maintenance, €60.00 insurance, €180.00 taxes and €50.00 other costs a month, 5% vacancy and an 8% management fee:
Those are the figures the calculator opens with — change the rent, the costs or the price and watch the cap rate move.
A cap rate is a comparison tool, not a verdict. A few things make it far more useful.
A cap rate only means something next to another one taken from the same market and property type. A warehouse, a block of flats and a shop on the same street can all show different cap rates for perfectly ordinary reasons.
The figure moves with the numbers you feed it. Leave insurance or a repair reserve out and every property looks better. Include the vacancy you actually expect and the comparison becomes honest.
Cap rate ignores your deposit, your loan and your interest rate, so it cannot tell you whether a deal works for you personally. Two identical cap rates can mean very different monthly cash flow.
Once the cap rate looks reasonable, enter the same property in the full calculator to see cash flow and cash-on-cash return on the cash you would actually commit.
Ready for the detailed numbers? Open the Full Property Calculator or compare income against price alone with the rental yield calculator.
A cap rate — short for capitalisation rate — is the share of a property's value that its rental income produces each year, before any mortgage. You take the net operating income the property earns and divide it by the price you would pay for it. A property costing 250,000 that nets 13,872 a year in operating income has a cap rate of about 5.5%.
Divide net operating income by the property's value, then multiply by 100. Net operating income is a full year's rent minus the property's running costs: empty months, management fees, maintenance, insurance, taxes, other recurring expenses and the reserve you set aside for unplanned repairs. Your mortgage is not part of it. Enter the figures above and the result updates as you type.
NOI is what a property earns in a year after its operating costs but before your loan payment and before tax. Start with the rent you realistically collect — annual rent minus the months the property stands empty — then subtract management, maintenance, insurance, property taxes, other expenses and your repair reserve. What is left is the income a buyer would weigh against the purchase price.
No. Cap rate measures the income the property itself produces against its value, independent of how you pay for it. Two identical buildings bought with different deposits have the same cap rate. To see what your own deposit earns, use the Nestlytics full property calculator, which divides annual cash flow by your down payment plus closing costs.
Not on its own. A higher cap rate often means the market sees more risk — a weaker location, an older building, shorter tenancies or more empty months — which is why the price sits low relative to the income. A lower cap rate usually reflects steadier demand and expected price growth. A cap rate is only useful beside a comparable one: same market, same property type, same assumptions.
Investors and valuers use it to compare the income power of different properties, to sanity-check an asking price, and to judge whether a market looks expensive relative to the rent the same property could earn. It also works in reverse: divide the net operating income you expect by a cap rate and you get the price that income would justify.
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