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Commercial Real Estate Resources for Northern Virginia CRE

(703)863-1895

Signed in as:

filler@godaddy.com

  • Home
  • Market Insights
  • Property Search
  • Resources
  • GPT Library
  • CRE Insights
  • CRE Calculation Library
  • CRE Calculator Center
    • CAP RATE CALCULATOR
    • LOAN CALCULATOR
    • BREAK-EVEN OCCUPANCY CALC
    • RENTAL RATE CALCULATOR
    • LOAN AMORTIZATION CALC
    • SF & FAR CALCULATOR
    • CASH FLOW CALCULATOR
    • DEBT SERVICE CALC
    • LEASE VS. BUY CALC
    • IRR CALCULATOR
    • LTV CALCULATOR
    • 1031 EXCHANGE CALC
    • CRE Investment Calculator
    • CRE: Lease vs. Buy
  • Contact
  • Featured Listings
  • Marketing Flyers
  • AI Market Updates (Video)

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Cap Rate Calculator

--CAP RATE CALCULATOR--

WHAT IS A CAP RATE?

A capitalization rate, or cap rate, is a metric used in the real estate industry to evaluate the return on investment (ROI) of income-producing properties. It is calculated by dividing the property's annual net operating income (NOI) by the current market value or purchase price of the property. This ratio, expressed as a percentage, provides investors with an estimate of potential return, helping them assess the risk and return profile of a real estate investment. Essentially, the cap rate offers a quick snapshot of a property's yield in a given year, without accounting for mortgage financing, making it a useful tool for comparing the profitability of different real estate investments. A higher cap rate implies a higher return on investment, but also potentially higher risk. Conversely, a lower cap rate suggests a lower return, often associated with less risk and more stable investments. Generally speaking, a cap rate between 5% and 7% could be considered good for this region.

Imagine you're looking at a property that generates $120,000 in NOI annually and has a current market value or purchase price of $1,500,000. 

Using the Inside NoVA CRE - Cap Rate Calculator below:

Monthly Rents Collected: $10,000

Monthly OPEX: $0

Purchase Price: $1,500,000

Cap Rate = $120,000/$1,500,000 = 0.08 or 8% 

--Cap Rate Calculator--

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