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Rental Cap Rate and Net Income Scenario

Compare annual modeled property income with value, using sequential expense and vacancy reductions.

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Calculator inputs

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How to use this calculator

  1. Enter the known values in the units shown. Results update as you type.
  2. Where results are editable, change one to solve backwards. Lock a value to hold it fixed.
  3. Use the worked example to check the method. Reset restores the starting fields.

Use the result with context

Results are estimates for planning and education. Confirm rates, taxes, fees, and legal requirements with the relevant institution or a qualified professional before making a financial decision.

Formula and method

A property worth 200000 with 20000 annual rent, 25% expense fraction and 10% vacancy gives net income of 13500 and cap rate of 6.75%.

NOI = gross income × (1 − expense fraction) × (1 − vacancy fraction); cap rate = NOI/value.

Worked example

Enter these known values and leave the other values blank.

Property value
200000 USD
Annual gross income
20000 USD
Operating expenses (percentage)
25 %
Vacancy rate
10 %
Operating expenses (total)
5000 USD
Annual net income
13500 USD
Cap rate
6.75 %

Assumptions and limitations

  • The expense fraction and vacancy fraction reduce gross income sequentially. This is a simplified convention; actual NOI may subtract fixed expenses after vacancy.
  • Use annual income and property value on a consistent basis. Debt service, tax, appreciation and sale proceeds are excluded.
  • Enter all monetary amounts in a single currency. Retained currency conversion factors are a captured static snapshot, not live exchange rates.
  • Clear a known field before solving for it. Locks retain chosen inputs; inconsistent locked values need correction. Reset restores the captured defaults.

Common questions

What does the worked example show?

A property worth 200000 with 20000 annual rent, 25% expense fraction and 10% vacancy gives net income of 13500 and cap rate of 6.75%.

What assumptions limit this calculation?

The expense fraction and vacancy fraction reduce gross income sequentially. This is a simplified convention; actual NOI may subtract fixed expenses after vacancy.

References

Use the documented finite scenario domain. property value must be positive. gross rental income must be positive. Use a percentage between zero and 100. Use a percentage between zero and 100.

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