Capitalization Rates (Cap Rate) Calculator

Calculates capitalization rate, annual net income, and operating expenses total for a property.

Capitalization Rate Formula

$19900 * $175000 * 100 = 11.37%John invests $175,000 in a property, which generates an annual net income of $19,900. The capitalization rate for this investment is 11.37%. This result indicates that John's property yields a return of 11.37% annually based on its value.

Annual Net Income Formula

$14600 * ( 1 - ( 14% / 100 ) ) * ( 1 - ( 17% / 100 ) ) = $10421.5.John's annual net income was $10,421.5 after deducting operating expenses and vacancy rates from his gross income. This calculation shows how much profit John retains after accounting for a 14% operating expense rate and a 17% vacancy rate.

Operating Expenses Total Formula

( 11% / 100 ) * $15400 = $1694.Emily's operating expenses total $1694, which represents 11% of her annual gross income of $15400.

Meaning

The Capitalization Rate (CR) is a metric used to evaluate the potential return on investment for a property, such as a rental building or apartment complex. It represents the rate at which an investor can expect to earn returns in relation to the value of their investment. In simpler terms, it measures how much money an investor can make from a property compared to its purchase price.