Enter a property's price, income, and expenses to instantly calculate its net operating income and capitalization rate.
Estimates only. Operating expenses should exclude debt service (mortgage payments). Always verify figures with your own due diligence.
The capitalization rate — or "cap rate" — is the most widely used metric in commercial real estate. It expresses a property's annual net operating income (NOI) as a percentage of its price or value, giving you a quick, financing-neutral read on the return a property produces.
NOI is the income a property generates after operating expenses — property taxes, insurance, maintenance, management, and reserves — but before debt service. Because it ignores your mortgage, the cap rate lets you compare two properties on equal footing, regardless of how each is financed.
Enter the property's purchase price, its annual gross income (all rent and recoverable charges), and its annual operating expenses. The calculator subtracts expenses from income to find NOI, then divides NOI by price to produce the cap rate — updating live as you type. You can also work backward: if you know the NOI a property produces and the cap rate you require, value is simply NOI divided by that cap rate.
There's no universal answer — a "good" cap rate depends on asset type, location, lease quality, and risk. As a general rule, a lower cap rate signals a safer, more in-demand asset (and a higher price per dollar of income), while a higher cap rate signals higher potential return paired with higher risk. Stabilized neighborhood retail in strong New Jersey submarkets has historically traded in roughly the 6–8% range, though this moves with interest rates and market conditions.
At Brunswick Properties, we underwrite conservatively and focus on the durability of the income behind the cap rate — because a headline rate means little if the tenants can't sustain it.
No. Cap rate is calculated on NOI, which is before debt service. To factor in financing, look at cash-on-cash return instead.
It depends on your goals. A higher cap rate means more income per dollar invested but usually more risk; a lower cap rate means a more stable, sought-after asset at a higher price. Neither is inherently "better."
Cap rate measures the property's unleveraged return at a point in time. ROI and cash-on-cash returns factor in financing, appreciation, and your actual cash invested.