Cap Rate Calculator
Professional Real Estate Cap Rate tool. Features closing cost adjustments, detailed expense breakdown, vacancy loss logic, and sensitivity matrix.
| Price \ Rent | -10% | Base | +10% |
|---|
About
The Capitalization Rate is the bedrock metric of real estate valuation, representing the unlevered yield of an asset. While amateur tools simply divide rent by price, professional analysis requires a granular approach to Net Operating Income (NOI). This tool distinguishes itself by factoring in Closing Costs (which increase the cost basis) and Vacancy/Credit Loss (which reduces Gross Potential Income). Ignoring these variables often leads to "False Positives" - investments that look profitable on paper but bleed cash in reality.
We have engineered this interface for both speed and precision. The "Quick Assessment" mode allows for back-of-the-napkin screening using industry standard expense ratios (35-50%), while the "Detailed Audit" mode permits line-item entry for Taxes, Insurance, CAM, and Management Fees. This dual approach minimizes user friction while maximizing analytical depth.
Formulas
The precise calculation of Cap Rate (Adjusted Cost Basis) involves determining the Net Operating Income (NOI) and dividing it by the total Acquisition Cost.
Where Igross is the total potential rental income, Vvacancy is economic loss due to vacancy or bad debt, and Eoperating includes taxes, insurance, maintenance, and management.
Reference Data
| Asset Class | Market Tier | Risk Profile | Expected Cap Rate Range | Expense Ratio Norms |
|---|---|---|---|---|
| Multifamily Class A | Tier 1 (NYC, SF, London) | Lowest (Core) | 3.25% to 4.50% | 25% to 35% |
| Multifamily Class B | Tier 2 (Austin, Denver) | Low-Med (Value-Add) | 4.50% to 5.75% | 35% to 45% |
| Multifamily Class C | Tier 3 / Tertiary | Medium (Yield) | 6.00% to 8.50% | 45% to 60% |
| Student Housing | Major University Towns | Medium-High | 5.50% to 7.25% | 40% to 50% |
| Senior Housing | National Average | High (Operational) | 7.00% to 10.00% | 60% to 75% |
| Industrial (Logistics) | Port Cities / Hubs | Low | 3.50% to 5.00% | 15% to 25% |
| Industrial (Flex R&D) | Suburban Tech Parks | Medium | 5.50% to 7.00% | 20% to 30% |
| Retail (Grocery Anchored) | Suburban Density | Low-Medium | 5.25% to 6.75% | 25% to 35% |
| Retail (Strip Center) | High Traffic Corridors | Medium | 6.50% to 8.00% | 30% to 40% |
| Office (CBD Class A) | Major Metros | Medium (Post-2020) | 5.00% to 6.50% | 35% to 45% |
| Office (Medical) | Hospital Adjacent | Low | 5.50% to 7.00% | 40% to 50% |
| Self-Storage | High Barrier to Entry | Low | 4.25% to 5.75% | 25% to 35% |
| Hotels (Full Service) | Tourist / Convention | Very High | 7.50% to 10.00% | 65% to 80% |
| Mobile Home Parks | Regional | Medium | 5.00% to 7.50% | 30% to 40% |
| Data Centers | Power Hubs | Specialized | 4.00% to 6.00% | 20% to 30% |
| Net Lease (STNL) | Pharmacy / QSR | Lowest (Bond-like) | 4.00% to 5.50% | 0% (Tenant pays) |