Gross operating income
Use supported rent and other recurring property income before financing.
RENTAL PROPERTY CAP RATE
Use cap rate to compare the property—not the financing.
Review annual net operating income against purchase price or value, then assess debt service and cash-on-cash return separately before deciding whether to proceed.
Review a rental property7 days free · then £9.99/month · up to 14 listings
Cap rate answers one question, not the whole investment decision
Cap rate is annual net operating income divided by property value. It can compare operating performance before financing, but it does not show mortgage payments, acquisition costs, future appreciation or the return on your actual cash invested.
What belongs in a cap-rate review
Vacancy and credit loss
Apply an allowance rather than assuming every unit pays for all twelve months.
Operating expenses
Include recurring property taxes, insurance, management, maintenance, HOA and relevant utilities.
Value basis
State whether the calculation uses purchase price, agreed price or a supported current value.
Read cap rate beside cash flow and cash invested
Property Action OS lets US investors record the listing in USD, keep operating assumptions visible and compare the result with financing, cash flow, downside tests and due-diligence evidence.
Property Action OS provides planning and decision-support calculations. Figures are illustrative and are not mortgage, financial, tax, valuation, surveying or legal advice. Verify material assumptions with qualified professionals.
Continue your property research
US rental cash-flow calculator · Compare property deals
How is cap rate calculated?
Divide annual net operating income by the property price or value, then multiply by 100.
Does net operating income include the mortgage?
No. Debt service is excluded from NOI and should be assessed separately in cash-flow and cash-on-cash calculations.