Rental calculators
Cap rate calculator for rental property.
Cap rate is net operating income divided by the property value: what a building earns in a year after running costs, as a share of what it is worth. Once your buildings are in Dardaris, you stop working yields out: each building’s yield keeps itself current from your leases, the rent that actually arrives and the value on file.
Dardaris · Statistics
Updates on its ownRent roll
€2.450
Occupancy
11/12
Gross yield
7,0%
Gross yield
What the portfolio would return fully let and fully paid, against what it actually returned.
Measured against €420.000 of recorded value.
Stop working it out by hand
- The rent comes off your leases and the payments off your bank, so the yield moves the day a rent arrives or a lot falls empty.
- You see what each building should return, what it actually returned, and the gap between the two.
- Every cost you book is filed against its building, so you know what each one costs to run.
A sample building. Your own figures appear as soon as one lease and the account the rent lands in are connected.
By hand
Cap rate calculator
For a building you are still weighing up. Enter the price, the rent and the costs to see the cap rate, the NOI behind it and, if you borrowed, your cash-on-cash return. Once you own it, let Dardaris keep the figures current instead.
Cap rate
6,5%
Net operating income
€19.360
Cash-on-cash return
Add the cash you put in to see it.
- Gross rent a year
- €28.800
- Less vacancy
- −€1.440
- Less operating costs
- −€8.000
€19.360 NOI divided by €300.000 value is a cap rate of 6,5%.
Between 4% and 10%: the range most residential rentals trade in.
Keep the NOI honest after you buyDardaris records every rent and every cost against the building, so the figure you bought on is the figure you can check a year later.
Start with one buildingNothing is stored and nothing is sent. The figures stay in this browser.
What Dardaris does with this
- Rent collected
- Bank reconciled
- Every action logged
Dardaris is an AI property manager for landlords. This page explains it once. Dardaris does it for every lease, every month, and asks you before anything goes out. See how it works →
Cap rate formula
Cap rate = net operating income ÷ property value.
Three figures, and the middle one is where most mistakes are made. Net operating income is not the rent: it is the rent you actually collect, less what it costs to run the building.
- Step 1
Start with the gross rent
Monthly rent for every unit, times twelve, as if the building were full all year.
- Step 2
Take off vacancy
No building is full all year. A vacancy allowance of 5% to 8% is common; use your own history if you have one.
- Step 3
Take off operating costs
Property tax, insurance, repairs, management, utilities you pay, HOA fees. The result is net operating income.
- Step 4
Divide by the value
NOI divided by the price or the current value. $18,000 of NOI on a $300,000 home is a 6% cap rate.
What is a good cap rate
There is no good cap rate, only one that fits the risk.
A higher cap rate means more income for each dollar of price, and the market charges for that with risk. Compare a property with similar ones in the same area, not with a national average.
Low, under 4%
Buyers accept little income because they expect the value to grow and the tenants to stay. Common in expensive, in-demand cities.
Middle, 4% to 10%
Where most residential rentals trade. A good one sits above the local average for a building in comparable condition.
High, over 10%
Strong income on paper. Check why: deferred repairs, a falling area, or a rent above what the market would pay a new tenant.
Where cap rates go wrong
Three ways to make a building look better than it is.
A cap rate is only as true as the NOI under it, and the seller wrote the first one you will see.
Counting the mortgage
Debt is left out on purpose so two buildings can be compared whoever finances them. Your own return on borrowed money is cash-on-cash, shown separately.
A building that is never empty
A pro forma with no vacancy and no bad debt is a best case. Put a month a year back in and see what is left.
No money for repairs
Roofs, boilers and appliances wear out on a schedule. Leaving them out of operating costs adds a point of cap rate that is not real.
Own several rentals?
Dardaris keeps the rent roll, the costs and the NOI of every building current on its own, from your leases and your bank feed. Start free or book a 20 minute walkthrough.
Next for the same building
Cap rate questions
What is a cap rate in real estate?
The capitalisation rate is the yearly net operating income of a property divided by its value. It tells you how much the building earns for each dollar it is worth, before financing, so buildings can be compared whatever mortgage sits on them.
How do you calculate cap rate?
Take the yearly rent, subtract an allowance for vacancy, subtract operating costs such as tax, insurance, repairs and management, and divide what is left by the property value. $18,000 of NOI on a $300,000 property is a 6% cap rate.
What is a good cap rate for a rental property?
Most residential rentals trade between about 4% and 10%. Lower rates are common in expensive, stable cities and higher ones where the risk is higher. Judge a cap rate against similar buildings in the same area rather than against a single number.
Does cap rate include the mortgage?
No. Cap rate leaves financing out so properties can be compared on their own. To see the return on the cash you put in after mortgage payments, use the cash-on-cash return, which the calculator shows when you add your cash and your yearly mortgage payments.
What is the difference between cap rate and cash-on-cash return?
Cap rate is NOI over the whole value of the property. Cash-on-cash is the cash flow left after the mortgage, over the cash you actually invested. With a loan, the two can differ a lot in either direction.
Is a higher cap rate better?
It means more income for the price, which is better only if the income is real and lasting. A high cap rate often reflects higher risk, more repairs or weaker demand, so check why before treating it as a bargain.
A cap rate is a promise. Running the building is how you keep it.
The NOI you bought on holds only if the rent arrives, the empty months stay short and the costs stay in their budget. That is the part Dardaris looks after.
- Rent collected and matchedEvery payment is read from your bank and settled against the lease it pays, so a gap in income shows the day it happens.
- Costs filed against the buildingRepairs, insurance and tax sit on the building they belong to, so the NOI of each one is always one look away.
- Shorter empty monthsRenewals and notices are prepared ahead of the date, which is where most vacancy is lost.
The number is the easy part.
Dardaris keeps the lease, raises the invoice, matches the payment and writes down what it did. Bring one building and watch it work through the free trial before you decide anything.
Free for 14 days, cancel whenever · Nothing is switched on until you say so