CrunchLease

Cap Rate Calculator

Solve cap rate, value, or required NOI — and stress-test value with a cap × NOI sensitivity matrix.

$/yr
$

Cap rate

Cap rate
7.50%
Property value
$2,000,000
Net operating income
$150,000

Value sensitivity — cap rate × NOI

Implied value by cap rate and NOI change
Cap ＼ NOI-10%-5%Base+5%+10%
4.5%$3,000,000$3,166,667$3,333,333$3,500,000$3,666,667
5.0%$2,700,000$2,850,000$3,000,000$3,150,000$3,300,000
5.5%$2,454,545$2,590,909$2,727,273$2,863,636$3,000,000
6.0%$2,250,000$2,375,000$2,500,000$2,625,000$2,750,000
6.5%$2,076,923$2,192,308$2,307,692$2,423,077$2,538,462
7.0%$1,928,571$2,035,714$2,142,857$2,250,000$2,357,143
7.5%$1,800,000$1,900,000$2,000,000$2,100,000$2,200,000
8.0%$1,687,500$1,781,250$1,875,000$1,968,750$2,062,500
8.5%$1,588,235$1,676,471$1,764,706$1,852,941$1,941,176
9.0%$1,500,000$1,583,333$1,666,667$1,750,000$1,833,333

Benchmarks reviewed 2026-07-08.

The cap rate formula, three ways

The capitalization rate ties a property’s net operating income to its value. Rearranged, one identity answers three questions:

cap = NOI / value × 100      value = NOI / (cap/100)      NOI = value × cap/100

Solve for the cap rate to see how a price pencils, for value to price a target return, or for required NOI to hit a value at a given cap. A $150,000 NOI on a $2,000,000 price is a 7.50% cap.

Building NOI correctly (what’s excluded)

NOI is income after operating expenses but before debt service, capital expenditures, and depreciation. Build it from the top:

EGI = gross potential rent × (1 − vacancy%) + other income
NOI = EGI − operating expenses − management fee

Our builder example: $200,000 GPR at 5% vacancy plus $5,000 other income is $195,000 EGI; after $48,000 of operating expenses and a 4% management fee ($7,800), NOI is $139,200. Leave mortgage payments out — cap rate is an unlevered measure.

What cap rates mean for value: sensitivity

Small cap-rate moves swing value hard. The sensitivity matrix stress-tests implied value across a band of cap rates and NOI outcomes, so you can see the downside before you sign. It’s the number worth screenshotting into a memo.

Typical cap rates by asset class

Directional national ranges for stabilized assets, drawn from the CBRE 2026 U.S. Real Estate Outlook, CBRE’s H2 2025 Cap Rate Survey, and Q1 2026 net-lease reports (Appendix A.1):

Asset classStabilized cap rateNotes
Multifamily4.5–6.5%Class A compresses to ~4.5–5.5%; secondary markets run higher
Industrial4.5–6.5%Tightest range; big-box ~5.5–7.0%, flex higher
Single-tenant NNN retail5.0–7.0%Overall STNL ~6.8%; trophy tenants sub-5%
Retail centers6.5–9.0%Anchored 6.5–8.0%, strip 7.0–9.0%
Office6.0–11%Widest, most split range — Class A CBD 6.0–8.0%, Class B 8.5–11%, Class C 8.7–9.4%
Medical office6.0–7.5%
Self-storage5.5–7.0%
Net lease (investment grade)5.0–6.5%
Hotel7.0–10%+Widest variation by brand and quality

CBRE projects 5–15 bps of compression across most property types in 2026. Ranges also vary by market tier — primary markets typically run 75–150 bps below tertiary markets.

To build the NOI behind the cap, use the NNN Lease Calculator and CAM Charges Calculator; to test the debt a purchase price supports, the DSCR Calculator.

Cap rate limits: what it ignores

Cap rate is a snapshot. It ignores leverage, future rent growth, capex, and lease rollover — two properties at the same cap can have very different risk. Use it to screen, then underwrite the cash flows and financing before you commit.

Frequently asked questions

What is a good cap rate?

There is no universal "good" cap rate — it depends on asset class, market, and risk. Lower caps (4–6%) reflect stable, in-demand assets like multifamily and industrial; higher caps (7–9%+) reflect more risk or weaker markets, as in some office and hotel. A "good" cap is one that fairly compensates you for the specific risk you are taking.

How do I calculate cap rate from NOI?

Divide net operating income by the property value and multiply by 100: cap = NOI / value × 100. A $150,000 NOI on a $2,000,000 property is a 7.5% cap. Make sure NOI is calculated correctly — income after operating expenses but before debt service, capex, and depreciation.

Does cap rate include mortgage payments?

No. Cap rate is an unlevered measure — it deliberately excludes financing so you can compare properties independent of how they are funded. Debt service, loan terms, and leverage affect your cash-on-cash return and DSCR, not the cap rate. Model the financing separately with the DSCR calculator.

Why do lower cap rates mean higher prices?

Because value = NOI / cap. For a fixed NOI, a lower cap rate divides by a smaller number, producing a higher value. Buyers accept lower caps (pay more per dollar of income) when they see lower risk or stronger growth. That inverse relationship is why "cap rate compression" pushes prices up.

Cap rate vs cash-on-cash return?

Cap rate is unlevered — NOI over price, ignoring debt. Cash-on-cash return is levered — annual pre-tax cash flow after debt service divided by the cash you invested. With positive leverage, cash-on-cash can exceed the cap rate; with expensive debt, it can fall below. Use both: cap rate to screen, cash-on-cash to judge the actual return on your equity.

Related calculators

DSCR Calculator Calculate debt service coverage and solve the maximum loan a property supports. Triple Net (NNN) Lease Calculator Add base rent, taxes, insurance, and CAM to see the true all-in cost of an NNN lease. CAM Charges Calculator Estimate your pro-rata share of common area maintenance and reconcile year-end true-ups.