Cap Rate Calculator.
The fundamental valuation metric in commercial real estate. Enter NOI and property value to see the implied cap rate and a sensitivity table at market rates.
Revenue minus operating expenses (excl. debt service)
All-in acquisition price or current market value
Cap rate is a snapshot of unlevered yield. Used alongside other metrics like cash-on-cash return, IRR, and equity multiple for full analysis.
Take it offline.
Download our Excel-ready Cap Rate Calculator with built-in formulas and sensitivity table.
A snapshot of unlevered yield.
The capitalization rate (cap rate) measures a property's annual return as a percentage of its value — before any financing. It's calculated as NOI ÷ Property Value.
Lower cap rates typically reflect stronger markets, newer assets, or lower perceived risk. Higher cap rates often signal value-add opportunity, older vintage, or secondary markets. In Texas multifamily, workforce housing assets typically trade between 5.0% and 6.5% depending on submarket and condition.
Cap rate is most useful for comparing similar assets and tracking market movement over time. But it's only one number — the full picture requires looking at what's beneath it.
Three inputs, an informed read.
Enter Net Operating Income
Use the annual NOI from a trailing 12-month (T-12) operating statement. NOI is gross revenue minus all operating expenses — taxes, insurance, payroll, utilities, repairs, management, marketing — but excludes debt service, capex, and depreciation.
Enter Property Value
Use the asking price, contract price, or your estimate of current market value. For acquisitions, include closing costs and any immediate capex needed to stabilize the asset for an "all-in" basis.
Read the Implied Cap Rate
The calculator instantly divides NOI by value. Compare this to the sensitivity table to see what the same NOI would be worth at different prevailing market cap rates — a quick way to gauge upside and downside.
The metrics that actually drive returns.
A headline cap rate can hide more than it reveals. Two deals at the same 5.5% cap can deliver radically different outcomes depending on what sits underneath. Here's what we look at on every acquisition.
A 5.5% cap rate at 95% occupied looks very different than one at 78% occupied. Vacancy creates both risk (income shortfall) and opportunity (value-add lease-up). Always ask: physical occupancy, economic occupancy, and trailing trend.
Texas multifamily typically operates at 45–55% expense ratios. A property reporting 35% expenses may be under-reporting taxes, deferred maintenance, or insurance — inflating NOI and depressing the apparent cap rate. Underwrite to market expenses, not seller numbers.
Cap rate ignores deferred maintenance and recurring capital reserves. A 6% cap on a 1985 vintage with original roofs, HVAC, and plumbing is not the same as 6% on a 2015 build. Always budget $250–$400 per unit per year in capex reserves.
A property in a high-growth submarket may justify a lower entry cap rate because future NOI growth lifts value. Sun Belt metros with strong job and population growth — Dallas, Houston, Austin, San Antonio — have historically commanded premium pricing for good reason.
We underwrite the whole deal — not just the cap rate.
Every Momentum acquisition runs through a 200+ line item underwriting model that stress-tests occupancy, rent growth, expense inflation, interest rate scenarios, exit cap expansion, and capital reserves. The going-in cap rate is the first conversation, not the last.
Use this calculator as a starting point. When you find a deal that looks interesting, run the cap rate — then look harder at expense ratios, T-3 vs T-12 trends, physical vs economic occupancy, and the capex picture. That's where the actual opportunity lives.