Cap Rate Calculator for Rental Properties
This cap rate calculator helps you judge a rental property by comparing the income it produces with its value. The cap rate is the net operating income as a percentage of the property value, so it gives you a simple way to compare one property with another on the same basis.
To use it, you need three figures: the rental income for a year, the operating costs for a year, and the property value or price. The calculator takes away the costs from the income to find the net operating income, then divides that by the property value to give the cap rate.
How to use the cap rate calculator
- Enter the rental income you expect the property to earn over one year.
- Enter the operating costs for the same year. Include the regular running costs of the property that you pay to keep it let.
- Enter the property value or price you are considering.
- Read the net operating income, which is the rental income minus the operating costs.
- Read the cap rate, shown as a percentage of the property value.
- Check the figures with your lender, bank or an accountant before you make a decision.
The formula
- Net operating income = rental income − operating costs
- Cap rate = net operating income ÷ property value × 100
Worked example
The figures below are made up to show the maths. They are not current prices, rates or product figures.
| Rental income per year | £36,000.00 |
|---|---|
| Operating costs per year | £12,000.00 |
| Property value or price | £400,000.00 |
- Cap rate 6.00%
- Net operating income £24,000.00
Tips for an accurate answer
- Use a full year of income and costs so the figures cover the same period.
- Be realistic about rental income, allowing for any time the property may be empty.
- Only include running costs in operating costs. Leave out mortgage payments, which are not part of this calculation.
- Use the same property value basis each time when you compare properties, so the results are fair to each other.
- This calculator is for working out figures only and is not financial advice. Confirm the numbers with your lender or bank where they matter.
Questions people ask
How do you compute a cap rate?
Enter the yearly rental income, the yearly operating costs and the property value. The calculator subtracts the costs from the income to find net operating income, then divides that by the property value and shows the result as a percentage.
How do I use a cap rate calculator for a property?
Enter the rental income, operating costs and property price for the same year. The calculator then shows the net operating income and the cap rate for that property.
Can a cap rate calculator help with real estate decisions?
It can help you compare the income a property produces with its value on a consistent basis. Use the result alongside other information and check figures with your lender or bank.
What income should I enter?
Enter the rental income you expect over one full year. If you are unsure, use figures you can justify and check them against what the property is likely to earn.
What counts as operating costs?
Operating costs are the regular running costs of the property, such as repairs, maintenance and management fees. Mortgage payments are not included in this calculation.
Does the cap rate include my mortgage?
No. The cap rate uses net operating income before financing costs, so mortgage payments are not part of the result.
Can I use this calculator for any property?
It works for any rental property where you have the yearly income, yearly operating costs and a value or price. The result is only as accurate as the figures you enter.
Should I rely on this result alone?
No. Use the cap rate as one part of your decision and check the figures with your lender or bank before you buy.
Sources
This calculator uses the standard loan and interest formulas above and the numbers you type. It needs no outside figures.
An estimate from the numbers you enter, worked out with the formula shown. It is maths, not financial advice: your lender or bank has the final figures. Page checked 23 Oct 2026. Read the disclaimer