Capitalization rate for a rental property at a glance.
Compute the cap rate of a rental — the unlevered annual return — by dividing net operating income by purchase price.
Cap rate = Net operating income / Property value × 100. NOI = annual rent − annual operating expenses (excluding mortgage and depreciation).
Compute the cap rate of a rental — the unlevered annual return — by dividing net operating income by purchase price.
Norms vary by city and asset class, but residential investors often use 5–10% as a working range. Lower means the property is priced for safety; higher implies more risk or work.
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