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Cap Rate Calculator
The cap rate on a rental from its price, rent and expenses, and the most to pay for the cap rate you want.
Cap rate calculator FAQs
What is a cap rate?
The capitalization rate is a property's net operating income for a year divided by its price. It shows the return the property makes on its own, before any loan, so you can compare properties of different sizes and prices.
What counts as net operating income?
Rent minus vacancy and operating expenses: taxes, insurance, repairs, management, utilities you pay, and HOA. Mortgage payments are not included, which is what lets the cap rate compare properties no matter how they are financed.
What is a good cap rate in Texas?
It depends on the area and property. Newer homes in strong DFW, Austin and Houston suburbs often trade around 5% to 6%; older homes and smaller towns are often 7% to 10% or more, with more work and risk. A higher cap rate is more income per dollar, usually for a reason.
Cap rate or cash-on-cash?
Cap rate measures the property; cash-on-cash measures your money after the loan. Use cap rate to compare properties and our rental calculator for what your own cash earns.