By Brandon Sooknanan, Founder of StatementReady
When you review the cap rate of an investment property in a loan file, keep financing out of operating expenses. The cap rate calculator works from the figures you enter.
Inputs
Property value or price, monthly gross rent, optional vacancy percent (no default; blank or zero skips it), monthly operating expenses. Price or current value/appraisal is the figure you choose.
Formula and outputs
Annual NOI = annual gross rent × (1 − vacancy) − annual operating expenses. Cap rate = NOI ÷ property value as a percent, rounded to two decimals. Outputs: annual NOI and cap rate. Mortgage payments are excluded; financing does not change cap rate.
Worked example (page numbers only)
- Rent $3,000/month = $36,000/year
- 5% vacancy entered removes $1,800 → $34,200
- Annual operating expenses $10,200 → NOI $24,000
- Value $400,000 → 6.00% cap rate
Round numbers for illustration only; the vacancy and expenses are inputs, not defaults.
Expense context
Taxes, insurance, repairs, management, owner-paid utilities and HOA dues are examples printed on the page; mortgage principal and interest are left out.
What it doesn't do
- Does not value the property or say what cap rate a market or lender looks for
- Sets no vacancy or expense figure
- No lending decision
- Runs in the browser; what you type isn't sent or stored
Related free tools: cash-on-cash calculator (adds financing), DSCR calculator, rental income calculator, all free tools.
When you're ready to work from the real statements, StatementReady checks whether each statement's transactions add up to its printed balances. It assists review of loan files; the lender makes all underwriting decisions.
Not legal or tax advice. StatementReady isn't affiliated with or endorsed by Fannie Mae or any lender named here.
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