SwitchWizeFinancial Decisions, Made Clearer
P2

Cap Rate Calculator

Calculate your rental property's cap rate to compare investment deals and assess annual returns on your purchase price.

Quick answer: Calculate a rental property's cap rate (net operating income divided by purchase price), the standard metric for comparing deals. Enter Purchase Price, Annual Gross Rental Income, and Annual Operating Expenses to personalize the estimate. It returns Cap Rate, Net Operating Income (NOI), and Monthly NOI so you can compare the impact before choosing a next step. Use it to compare payment, equity, rate, and timing tradeoffs before applying or changing a loan.

SWReviewed by SwitchWize Research Desk · Last reviewed June 30, 2026
Cap Rate
6.86%
Cap Rate
6.86%
Net Operating Income (NOI)
$24,000
Monthly NOI
$2,000
Diagnostic

This property's cap rate is 6.86%. Net operating income of $24,000 against a $350,000 purchase price.

Most investors treat 4-10.00% as the typical range, with higher cap rates reflecting higher perceived risk or lower-growth markets.

Compare investment property loans
What to do next

Compare investment property loans

Your action plan
  1. 1

    Set the target and timeline for this plan

    Calculate a rental property's cap rate (net operating income divided by purchase price), the standard metric for comparing deals.

  2. 2

    Pressure-test one alternate scenario before deciding

    Assumptions change the answer, especially when rates, taxes, or timing matter.

  3. 3

    Save the result to Money Map or use the linked next action

    Turn the result into a prioritized action instead of treating it as a one-off number.

Compare investment property loans

This is an educational estimate, not tax, legal, investment, or lending advice. Tax rules, rates, and eligibility change and depend on your full situation. Confirm with a qualified professional or the provider before acting.

Calculator action path

Turn this result into a decision

Every SwitchWize calculator connects to a product comparison, rate context, guidance, alerts, and Money Map.

Rate authority hub
Compare
Compare investment property loansMove from calculation to current product options.
Rate Trend
Track mortgage ratesUse market context before you decide when to act.
Guide
The Buyer-Broker Agreement: What Changed for Homebuyers After the NAR SettlementUnderstand written buyer agreements, negotiated agent compensation, and why VA seller-paid brokerage charges are not seller concessions.
Money Map
Add this scenario to Money MapTurn the result into a saved opportunity or plan item.
Alert
Create a rate alertWatch the market instead of checking manually.

About mortgage rates

Mortgage rates depend on loan type (30-yr fixed, 15-yr fixed, ARM, FHA, VA, jumbo), your credit score, down payment, points paid, loan amount, property state, and whether you're purchasing or refinancing. The calculator above uses a representative market rate for payment estimates, your actual rate will vary.

For a personalized rate comparison, use the tool below to see lenders ranked by APR, loan type, and your profile.

Compare mortgage rates
30-yr fixed · 15-yr fixed · FHA · VA · ARM: ranked by APR
Compare rates →

Mortgage rates shown on SwitchWize compare pages include loan type, assumed FICO, LTV, and points. Representative only. Verify all terms directly with the lender. Advertising disclosure

Free to embed

Add this calculator to your site

Paste this snippet into any page. No account or API key required, the widget is responsive, and it updates with live rates. A SwitchWize attribution link is included in the embed automatically.

<iframe src="https://www.switchwize.com/embed/cap-rate?source=embed_selfserve" width="100%" height="680" loading="lazy" style="border:1px solid #e2e8f0;border-radius:14px;max-width:100%;width:100%" title="SwitchWize calculator"></iframe>
<script>(function(){window.addEventListener("message",function(e){if(e.origin!=="https://www.switchwize.com")return;var d=e.data;if(!d||d.type!=="sw-embed-resize")return;var f=document.getElementsByTagName("iframe");for(var i=0;i<f.length;i++){if(f[i].contentWindow===e.source){f[i].style.height=d.height+"px";break;}}});})();</script>

Frequently Asked Questions

Everything you need to know.

What does an example Cap Rate Calculator calculation look like?
Using this calculator's own default assumptions, a purchase price of $350,000, annual gross rental income of $36,000 and annual operating expenses of $12,000 produces an estimated cap rate of 6.9% and net operating income (noi) of $24,000. Enter your own numbers above to see how it changes for your situation.
What's the difference between cap rate and cash-on-cash return?
Cap rate divides net operating income by the total purchase price, while cash-on-cash return divides annual cash flow by the actual cash you invested out of pocket. If you finance a purchase with a mortgage, your cash-on-cash return will be higher than the cap rate because you've invested less of your own money relative to the property's value.
Should I always choose the property with the highest cap rate?
Not necessarily. A higher cap rate often reflects a property in a slower-growth area or with higher vacancy risk, while a lower cap rate may indicate a stable market with appreciation potential. Your choice should balance cap rate with location fundamentals, market trends, and your investment timeline.
Is the Cap Rate Calculator free to use?
Yes. SwitchWize calculators are free, and you do not need an account to run scenarios or view the result.
Does using the Cap Rate Calculator affect my credit score?
No. Using a calculator does not trigger a credit check. A credit impact can occur only if you apply directly with a lender, card issuer, or provider.
Are the results personalized financial advice?
No. Calculator outputs are educational estimates based on the inputs you enter. Review assumptions and confirm terms directly with providers before making a financial decision.
What should I do after seeing the result?
Use the recommendation module on this page to compare investment property loans, or run Money Map to compare this home & mortgage decision with your other opportunities.
How does SwitchWize choose related offers?
Related offers are matched by the calculator surface (mortgage) and ranked using SwitchWize data such as rate, fees, trust signals, product fit, and switching friction. Paid relationships do not change organic ranking order.
How fresh are the rates and offers shown?
Rate and offer data is reviewed on a recurring cadence and every offer module shows review context or links to the methodology and disclosure pages.
Where can I see the ranking methodology?
The SwitchWize methodology page explains how rate freshness, editorial review, affiliate disclosure, and category ranking factors work.
Can Money Map use this result?
Yes. Money Map is the broader diagnostic path: it compares savings, mortgage, cards, and debt so you can see whether this calculator result is your highest-impact next move.

Why This Matters

Cap rate tells you what percentage return a property generates annually on your invested capital, making it the standard metric for comparing rental properties side-by-side. A higher cap rate means stronger cash flow relative to what you paid, but it also often signals higher risk or less desirable markets. Understanding this ratio helps you identify which deals align with your investment goals.

How to Use It

  1. 1Enter the total purchase price of the rental property.
  2. 2Input the annual gross rental income you expect to collect.
  3. 3Add up all annual operating expenses, including maintenance, property management, insurance, and taxes.
  4. 4Review your net operating income, cap rate percentage, and monthly NOI to evaluate the property's cash flow performance.
Related calculators
DSCR CalculatorRent vs. Buy Horizon Cost EstimateClosing Costs CalculatorCommercial Mortgage Calculator
Compare investment property loans