Cap Rate Calculator

Cap rate measures how a property performs on its own — before any loan is involved. That makes it a useful way to compare properties regardless of how they're financed.

DealPrism uses cap rate as an estimated unlevered yield metric alongside cash flow and DSCR so users can separate property performance from loan structure.

Stronger result: A useful cap rate is market-aware. In some cities a 6% cap rate is competitive; in others it signals unusual risk. The number only matters when paired with local context and realistic NOI assumptions.

Weaker result: A weak cap rate interpretation usually means someone is comparing properties without verifying the NOI. Inflated rent or missing reserves can make a mediocre deal look artificially strong.

• Use cap rate to compare properties before financing.
• Validate the NOI line items behind the cap rate.
• Pair cap rate with cash flow and DSCR before making a decision.

A property with $18,000 annual NOI and a $300,000 purchase price has an estimated 6.0% cap rate.

This is the point of an underwriting calculator: one number should always be traceable back to its underlying assumptions. If the output changes after a small rent, expense, or financing update, that is not noise. It is the deal showing you where the real sensitivity lives.

No serious rental property decision should rely on a single output. A cap rate without financing context, a mortgage payment without operating expenses, or a DSCR without rent validation can all point investors in the wrong direction.

The practical goal is not to memorize formulas. It is to understand which assumption changed, whether that change is realistic, and how the full deal behaves once the inputs are connected.