Cap rate calculator
A property earning 50,000 of net operating income a year and worth 1,000,000 has a 5% cap rate. Enter the annual net operating income and the current market value to compare listings before a full underwriting model. Free in your browser.
- Free
- Runs in your browser
- No sign-up
- Your data stays on your device
Run — free
Worked example
- Noi
- 50,000
- Property value
- 1,000,000
- Cap rate
- 5
Capitalization rate, or cap rate, is the unlevered yield an income property would produce if you bought it for cash today: annual net operating income divided by current market value, expressed as a percent. Investors, brokers, lenders, and appraisers use that single percentage to compare listings across neighborhoods, vintages, and asset classes before they open a full underwriting model. This cap rate calculator takes two numbers in the same currency — annual net operating income and current market value — divides them, multiplies by one hundred, and returns the capitalization rate as a percentage with the formula shown beside the result.
How capitalization rate turns NOI and market value into a yield
The capitalization rate of an income property is the unlevered yield implied by today's price: annual net operating income divided by current market value, then scaled to a percent. NOI is the property's income after operating expenses — vacancy, property tax, insurance, utilities, management, and reserves — and before debt service, depreciation, and income tax. That is why two buildings with the same rent roll can print different cap rates: the one with higher operating costs has a thinner NOI and a lower yield at the same asking price.
A fifty-thousand NOI on a one-million market value is five percent; a forty-seven thousand eight hundred fifty dollars and seventy-five cents of NOI on an eight hundred seventy-five thousand value is about five point four seven percent. A zero NOI is a legitimate outcome and returns a cap rate of zero rather than an error: the asset produced no net operating income in the year you measured.
A negative NOI is also legitimate — expenses outran income — and the cap rate comes back negative, which is the honest signal rather than a silent absolute value. What is not legitimate is a zero or negative property value, because dividing by a non-positive price does not produce a yield. You supply both numbers in one currency; the calculator divides them and rounds the percentage half-up to six decimal places so goldens compare byte-for-byte across runtimes.
This is a going-in market cap rate, not a cash-on-cash return, not a debt-service coverage ratio, and not a discounted-cash-flow internal rate of return.
What you can do with it
Listing screen before underwriting
Turn last year's net operating income and the asking price into one going-in cap rate before you open a full rent-roll model.
Lender and appraisal cross-checks
Pin a going-in capitalization rate next to DSCR and a discounted-cash-flow case so credit memos share one unlevered yield.
FAQ
How is capitalization rate calculated?
The result is a percentage: five percent comes back as 5, not 0.05. The rate is rounded half-up to six decimal places.
What happens if the property value is zero or negative?
Capitalization rate is undefined when property value is not positive, and those failures are not billed.
What should I enter as net operating income?
Use trailing twelve months, in-place, or pro forma — whichever matches the value you are applying. The calculator does not rebuild the operating statement.
Is this the same as cash-on-cash return or DSCR?
No. Cap rate is unlevered: one year of NOI against today's market value. Cash-on-cash uses cash flow after debt against cash equity. Debt-service coverage (DSCR) divides NOI by annual debt service. Those are different searches and different jobs.
Can a cap rate be zero or negative?
Yes. A year with no net operating income gives a cap rate of zero, and a year where expenses outran income gives a negative one. That negative figure is an honest warning sign, so it is shown as it is.
Related tools
For developers — API access
Everything on this page is available programmatically. This section is for teams who want to wire it into their own systems; everyone else can just use the tool above.
API endpoint
Prefer to automate it? One authenticated POST creates the task; the result comes back by webhook or a signed link. The same capability also runs here on the web, by email and from Telegram — and soon from our app too.
Call it from your stack
curl -X POST https://api.kit.forhosting.com/fin/cap-rate \
-H "Authorization: Bearer $KIT_KEY" \
-H "Content-Type: application/json" \
-d '{"noi":50000,"property_value":1000000}'const res = await fetch("https://api.kit.forhosting.com/fin/cap-rate", {
method: "POST",
headers: {
"Authorization": `Bearer ${process.env.KIT_KEY}`,
"Content-Type": "application/json"
},
body: JSON.stringify({
"noi": 50000,
"property_value": 1000000
})
});
const { task_id } = await res.json();import os, requests
res = requests.post(
"https://api.kit.forhosting.com/fin/cap-rate",
headers={"Authorization": f"Bearer {os.environ['KIT_KEY']}"},
json={
"noi": 50000,
"property_value": 1000000
},
)
task_id = res.json()["task_id"]<?php
$res = file_get_contents("https://api.kit.forhosting.com/fin/cap-rate", false, stream_context_create([
"http" => [
"method" => "POST",
"header" => "Authorization: Bearer " . getenv("KIT_KEY") . "\r\nContent-Type: application/json",
"content" => '{"noi":50000,"property_value":1000000}',
],
]));
$task = json_decode($res, true);body := bytes.NewBufferString(`{"noi":50000,"property_value":1000000}`)
req, _ := http.NewRequest("POST", "https://api.kit.forhosting.com/fin/cap-rate", body)
req.Header.Set("Authorization", "Bearer "+os.Getenv("KIT_KEY"))
req.Header.Set("Content-Type", "application/json")
res, _ := http.DefaultClient.Do(req)Example request
{
"noi": 50000,
"property_value": 1000000
}Example response
{
"task_id": "tsk_a1b2c3d4e5f6a1b2c3d4e5f6",
"type": "fin.cap_rate",
"status": "queued",
"_links": {
"result": "/tasks/tsk_…/result"
}
}The API is asynchronous: the call returns a task_id immediately and the result arrives by webhook. Polling is capped at 1 req/s per task.
Pricing
Published price — no tokens, no invented credits. A failed task is never charged.
Errors
| HTTP | Code | Meaning |
|---|---|---|
401 | unauthorized | Missing or invalid API key. |
402 | insufficient_balance | Your balance doesn't cover the task price. |
404 | unknown_type | That task type doesn't exist. |
429 | rate_limited | Too many requests. Use the webhook instead of polling. |
Technical notes
A property value that is zero, negative, or not a finite number is rejected with invalid_input and is not billed, because a non-positive price cannot define a yield.
How capitalization rate turns NOI and market value into a yield
The identity this calculator uses is cap_rate equals noi divided by property_value, times one hundred. This endpoint does not reconstruct a trailing-twelve-month statement, does not apply a vacancy assumption, does not subtract debt service, and does not convert currencies.
Input contract, response shape, and error behaviour
Example: fifty thousand of annual NOI and a one-million market value yield a capitalization rate of five. POST a JSON body with two required finite numbers. noi is annual net operating income in one currency unit; aliases net_operating_income, annual_noi, and net_operating map to the same field so a broker worksheet can keep its column names. property_value is the current market value in that same currency; aliases market_value, current_value, and value are accepted. Each numeric field may arrive as a JSON number or a numeric string. Missing fields, empty strings, and non-finite values fail with invalid_input naming the field. Annual NOI may be zero or negative: a vacant or loss-making year times a positive value produces a zero or negative cap_rate, which is the honest going-in result rather than a clamped percentage. On success the body echoes noi and property_value, then reports cap_rate as a percentage rounded half-up to six decimal places, plus a formula string restating the identity. Pair the JSON with your own rule for which NOI definition matches the value you chose — trailing twelve months, in-place, or pro forma — because this endpoint divides the two numbers you send; it does not rebuild the operating statement, choose a cap-rate band, or convert currencies.
Where a cap rate calculator earns its keep
Buyers screening listings use a cap rate calculator to turn last year's net operating income and the asking price into one comparable yield before they spend a weekend on rent comps. Lenders and appraisers drop NOI from the trailing statement and market value from the appraisal or purchase contract, and they compare the going-in cap rate with a debt-service coverage case rather than treating either ratio as a substitute. A capitalization rate prices one year of unlevered NOI against today's value. Failed validation does not consume balance. Brokers re-run the same two fields when a year closes or an offer moves the price, then pin cap_rate in a teaser so every buyer conversation starts from one percentage. This is a different search and a different job from the one-percent rule, from debt-service coverage, from interest capitalization, and from net present value: those tools price monthly rent against purchase price, income against loan payments, compounding of unpaid interest, or a discounted cash-flow path. Keep property_value strictly positive, pin the rounded percentage in tests, and you get a reproducible capitalization rate for teasers, LMS plugins, and edge workers without standing up an underwriting engine of your own.
Integration use cases
Broker teaser and offer memos
Re-price a listing when the year closes or an offer moves the value: same calculator, new noi or property_value, one shared cap_rate.
Technical questions
What does the cap rate calculator cost?
The browser tool is free. API requests use prepaid KIT balance at $0.002 per successful call; invalid input is not billed.