How it works
Annual gross rent is monthly rent times 12. Net operating income (NOI) is annual gross rent minus annual expenses. Cap rate = NOI divided by property price, times 100. Gross yield = annual gross rent divided by property price, times 100.
Frequently asked questions
What is a good cap rate?
There is no single good number — it varies by market, property type, and risk. Use cap rate to compare similar properties, not as a guarantee of returns.
Does cap rate include the mortgage?
No. Cap rate uses net operating income before mortgage payments, so it compares properties without financing differences.