Calculate capitalization rate, net operating income, and yield for any rental property. Benchmarks against market norms.
Cap rate = NOI ÷ property value. Unlike cash-on-cash return, it ignores your financing — so two investors can compare the same deal even with different mortgages.
4–6% is typical for appreciating metros with high barriers to entry. Solid if leverage amplifies the return.
Annual net operating income ÷ property value. Measures unlevered yield on a rental. A 6% cap rate means the property earns 6% of its value per year before mortgage. Used to compare rental properties across markets.
Effective gross income minus operating expenses, excluding debt service. Standard metric commercial lenders use to evaluate property income potential. Does NOT subtract mortgage, depreciation, or capex.
Gross rent minus vacancy allowance. If a property rents for $2,000/month and you assume 5% vacancy, effective gross income is $22,800/year, not $24,000.
Operating expenses ÷ effective gross income. Typical range: 35–50% for residential. A property with an 80% OER is probably being mis-managed — or mis-represented by the seller.
Richify tracks cap rate, cash flow, and cash-on-cash across every property you own — with AI insights.
Get Richify Free