About the Cap Rate Calculator
What is the Cap Rate Calculator?
The capitalisation rate, or cap rate, is the standard yardstick for income-producing property. It is the net operating income (NOI) as a percentage of the property's value, ignoring how the purchase is financed.
Enter the value, gross rent, vacancy allowance and operating expenses. This cap rate calculator works out NOI, the cap rate and the value the same income would justify at an 8% cap rate.
How to use the Cap Rate Calculator
- Property Value / Purchase Price (₹) (sample: 2,00,00,000)
- Gross Annual Rent (₹) (sample: 18,00,000)
- Vacancy & Collection Loss (%) (sample: 5)
- Annual Operating Expenses (₹) (sample: 2,50,000)
- Press Calculate Cap Rate (results also refresh as you type). The result card shows the Capitalisation Rate, along with Net operating income (NOI), Effective gross income, Operating expense ratio and Value at an 8% cap rate.
Formula used
Cap rate = Net operating income ÷ Property value × 100
- NOI = gross rent × (1 − vacancy %) − operating expenses
- Operating expenses = maintenance, property tax, insurance, management; not loan EMIs or depreciation
Rearranged, Value = NOI ÷ Cap rate, which is how commercial property is often priced.
Worked example
These are the sample values already filled in the calculator above, and the result it returns for them:
| Input | Sample value |
|---|---|
| Property Value / Purchase Price (₹) | 2,00,00,000 |
| Gross Annual Rent (₹) | 18,00,000 |
| Vacancy & Collection Loss (%) | 5 |
| Annual Operating Expenses (₹) | 2,50,000 |
| Result | Value |
|---|---|
| Capitalisation Rate | 7.3% |
| Net operating income (NOI) | ₹14,60,000 |
| Effective gross income | ₹17,10,000 |
| Operating expense ratio | 14.6% |
| Value at an 8% cap rate | ₹1,82,50,000 |
Tips for using the Cap Rate Calculator
- A higher cap rate means more income per rupee but usually more risk, such as a weaker tenant or location.
- Compare cap rates only between similar properties in similar markets.
- Grade-A offices in Indian metros typically trade at cap rates around 7–8.5%.