BrickAtlasCalculatorsCap rate
Cap rate calculator
Divide net operating income by purchase price. This is the purchase-only cap rate BrickAtlas Analyst puts on every rental memo.
Calculate a cap rate
Enter the purchase price and either annual NOI or the rent and expenses BrickAtlas uses to build NOI. The result updates as you type.
Annual operating costs
Percent of gross rent
Purchase-only cap rate
8.1%
$14,908 NOI ÷ $185,000 purchase price
- Gross rent
- $25,200
- Vacancy
- $1,260
- Operating expenses
- $9,032
- NOI
- $14,908
Mortgage payments, rehab, and closing costs stay out of this ratio.
How cap rate is calculated
Cap rate = NOI ÷ purchase price
Net operating income is one year of rent after vacancy, minus operating costs. BrickAtlas counts property taxes, insurance, HOA, land or lot rent, maintenance, and property management. The denominator is the purchase price alone.
The sample loaded above is a $185,000 purchase with $2,100 monthly rent. NOI comes out to $14,908, so the cap rate is 8.1%.
Debt stays in other metrics
Mortgage payments change cash flow, cash-on-cash, and DSCR. They stay out of NOI, so they leave this cap rate unchanged.
Rehab stays out of the price
Purchase-only cap rate ignores renovation. All-in yield divides the same NOI by purchase plus rehab, and the Investment Memo reports that separately.
Closing costs stay out
Cash-on-cash includes the cash you bring to closing. Cap rate uses the purchase price, so closing costs do not move it.
What this number doesn’t tell you
Cap rate is a cash-yield screen on the purchase price. Financing, condition, and market choice still decide whether the property belongs in the portfolio. BrickAtlas runs that loop after the screen: persona, metros, listings, then a strategy-aware Investment Memo.
Cash left in the deal
Two buyers can share a cap rate and still land on different cash-on-cash returns once down payment, rate, and closing costs are in. Analyst computes those next to DSCR.
The work the property still needs
Condition, rehab, and after-repair value sit outside this ratio. Analyst reads photos and comps before it recommends a strategy and an offer.
Whether this market fits
A strong cap rate in the wrong metro is still the wrong next investment. Explore ranks cities with Atlas Score and persona Match before you underwrite an address.
FAQ
- What is cap rate on a rental property?
- Cap rate is net operating income divided by purchase price. A property with $15,000 of NOI and a $200,000 price has a 7.5% cap rate. BrickAtlas computes that ratio in code and shows it as a percent.
- Does this calculator include the mortgage?
- Mortgage payments are excluded. Cap rate uses NOI before debt service and divides by the purchase price, so the loan, rate, and down payment do not change the result. Cash-on-cash and DSCR are the metrics that include financing.
- Is this the same cap rate as BrickAtlas Analyst?
- Yes. This page uses the same purchase-only formula as Analyst, and the same operating statement for taxes, insurance, vacancy, maintenance, management, HOA, and land rent. Rehab and closing costs stay in other memo metrics.
- What cap rate does BrickAtlas treat as strong?
- For a long-term rental screen, BrickAtlas marks purchase-only cap rate under 5% as weak, from 5% up to 7% as acceptable, and 7% or higher as strong. The bands are a screen. Cash flow, financing, condition, and market fit still decide the deal.
- Where should I go after a cap rate screen?
- If the yield is interesting, open Analyst on the address for cash flow, DSCR, strategy, and an Investment Memo. If you are still choosing a city, start in Explore and let persona Match narrow the metros.
Take the screen into a full memo
Set a persona, explore metros that match, and underwrite the address with strategy, cash flow, and cap rate in one place.
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