Short answer: Cap rate is a property's annual net operating income divided by its purchase price. It shows the return as if you paid all cash, so it ignores your mortgage.
This free cap rate calculator uses the same formulas as FirstDoor's full deal score. See exactly how each number is calculated on our methodology page, or learn more in the guide: What is a good cap rate.
Frequently asked questions
How do you calculate cap rate?
Divide annual net operating income (rent minus taxes, insurance, HOA, vacancy, maintenance and management) by the purchase price.
Does cap rate include the mortgage?
No. Cap rate excludes financing. Use cash-on-cash return or DSCR to see the effect of your loan.
What is a good cap rate?
It depends on the market and risk. FirstDoor treats 6% or higher as a healthy sign for a first rental.
More free calculators
- Cash-on-cash calculator
- DSCR calculator
- 1% rule checker
- Rental cash flow calculator
- Mortgage (PITI) calculator
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