[ Free Tool · Estimation ]

Free Cap Rate & Cash-on-Cash Calculator

Free cap rate calculator for rental property investors. Enter purchase price, rent, and operating expenses to instantly see net operating income (NOI), cap rate, cash-on-cash return, debt service coverage ratio (DSCR), and gross rent multiplier (GRM). Built for real estate investors, BRRRR operators, and agents underwriting deals for buyer clients. 100% browser-based, no signup, no upload.

[ Pourquoi utiliser cet outil ? ]

Built for real estate, not generic AI.

100% free — no signup, no credit card

Cap rate (NOI / purchase price) — the standard investor metric

Cash-on-cash return with full mortgage calculation

DSCR (debt service coverage ratio) — what lenders underwrite to

Gross rent multiplier (GRM) for quick comparison

Vacancy, maintenance, and management %-based — not flat dollars

Real-time recalculation as you tweak any input

One-click copy of the full underwriting breakdown

Runs entirely in your browser — works offline

[ How it works ]

How to Calculate Cap Rate on a Rental Property

1

Enter Purchase Price + Monthly Rent

The two anchor numbers. Use realistic in-place market rent — not the seller's projected number unless tenants are actually paying it.

2

Set Vacancy Allowance

5% is standard for stable urban / suburban markets. Bump to 8–10% for class C neighborhoods or vacation rentals; drop to 3% for tight metros where you can re-tenant in days.

3

Add Operating Expenses

Property taxes, insurance, HOA, maintenance reserve (5% of gross rent), management fee (8% of effective rent for off-site managers), owner-paid utilities, and any other annual costs. The tool sums everything and shows the NOI.

4

Add Financing for Cash-on-Cash

Down payment %, closing costs, interest rate, and loan term. The tool computes monthly mortgage, debt service coverage ratio (DSCR), and the actual annual cash flow you'd put in your pocket.

5

Read Cap Rate + DSCR

Cap rate compares the property to others as an unlevered return — 4–6% on premium markets, 7–9% in cash-flow markets. DSCR ≥ 1.25 is the typical lender threshold for an investment loan; below 1.0 means rents don't cover the mortgage.

BrightShot's free cap rate calculator is the all-in-one underwriting tool real estate investors actually want: cap rate, cash-on-cash return, DSCR, gross rent multiplier, and rental yield in a single screen. Built for buy-and-hold investors, house hackers, agents who work with investors, BRRRR strategists, and short-term rental operators who need to triage 50 listings down to one before the weekend showing tour.

Cap rate is the unlevered yield on a rental property — the percentage return you would earn if you bought the property in cash and ran it as-is.

What Is a Cap Rate, and How Do You Calculate It?

Capitalization rate (cap rate) is the most quoted number in real estate investing, and the most commonly miscalculated. The formula is simple: Cap Rate = Net Operating Income (NOI) ÷ Purchase Price. The trap is in the NOI. Net operating income includes annual gross rent, plus other income (laundry, parking, pet fees), minus operating expenses: property taxes, insurance, property management (typically 8–10% of rent), repairs and maintenance (5–10%), vacancy allowance (5–8%), HOA dues, utilities the landlord pays, lawn care, snow removal, and a capital expenditure reserve (5–10% for roof, HVAC, water heater, appliances). What does not belong in NOI: mortgage principal and interest, depreciation, income taxes, and one-time capex like a full kitchen remodel — those live below the NOI line. Worked example: a $400,000 single-family rental with $36,000 in annual rent ($3,000/mo), $4,800 property tax, $1,800 insurance, $3,600 management, $2,400 repairs, $2,160 vacancy, and $1,800 capex reserve = $16,560 expenses. NOI = $36,000 − $16,560 = $19,440. Cap rate = $19,440 ÷ $400,000 = 4.86%. That same property pencils very differently if you skip the management fee and capex reserve — which is exactly how listing agents make pro formas look better than they really are. Our calculator forces every line item, so the cap rate you walk away with is defensible. Pair it with our free commission calculator when you're modeling a 1031 exchange or quick-flip exit.

There is no national "good" cap rate. The right benchmark is the cap rate of comparable properties in the same submarket, with the same asset class, sold in the last 90 days.

What's a Good Cap Rate for Rental Property in 2026?

Cap rate ranges in 2026 vary wildly by market and asset class, and the "national average cap rate" you see on Google is a meaningless blended number. Here's the honest playbook: Tier-1 coastal metros (NYC, San Francisco, Boston, Seattle, San Diego) Class A: 4.0–5.0%. Investors accept lower yields because appreciation and rent growth do most of the work. Sun Belt growth markets (Phoenix, Charlotte, Tampa, Austin, Nashville, Raleigh) Class B: 5.5–7.0%. The sweet spot for buy-and-hold investors who want both cash flow and appreciation. Midwest and smaller-market Class B/C (Cleveland, Indianapolis, Memphis, Birmingham, Kansas City): 7.0–10.0%+. Higher cap rates compensate for slower rent growth and thinner buyer pools at exit. Short-term rentals (Airbnb, VRBO): typically 8–12% on gross-rent-equivalent basis, but with double the expense ratio of long-term rentals. The non-negotiable rule: compare your prospect's cap rate to local sold comps in the same asset class — your title company can pull the last 6 months of investor sales in the same zip code. A 7% cap looks great in San Francisco and terrible in Memphis. If you're sizing up a property by physical specs, our square footage calculator helps you sanity-check the price-per-square-foot against neighborhood comps before you even open the spreadsheet.

Cap rate measures the property. Cash-on-cash measures your investment. Two different questions, two different answers — and most investors only ever calculate one.

Cap Rate vs Cash-on-Cash Return: Which One Matters More?

This is the single most common confusion in rental property analysis, and it costs investors deals. Cap rate is unlevered — it ignores your mortgage entirely and tells you what the property earns in cash. Cash-on-cash return is levered — it tells you what your cash invested earns after debt service. Formula: CoC = (NOI − Annual Debt Service) ÷ Total Cash Invested. Total cash invested = down payment + closing costs + initial repairs + reserves. Worked example using the property from section 1 (NOI $19,440 on $400K): with a 25% down, 30-year mortgage at 7.0%, monthly P&I is $1,996, annual debt service $23,948. NOI minus debt service is negative $4,508 — this property has negative cash flow on paper. Total cash in: $100,000 down + $12,000 closing + $5,000 reserves = $117,000. Cash-on-cash = −3.85%. Now reverse it: same property, 7% cap, but rates drop to 5.5% — annual debt service falls to $20,439, cash-on-cash flips positive to ~−0.85%, and at 4.5% rates you'd see meaningfully positive cash-on-cash. Positive leverage (cap rate > interest rate) is what makes cash-on-cash exceed cap rate; negative leverage (the world we've lived in since 2023) means cash-on-cash is lower than the cap rate, and many "good" deals on paper are cash-flow negative. Use cap rate to compare properties; use cash-on-cash to decide whether your capital should go into this deal.

If you're financing a rental with a DSCR loan or commercial mortgage, the bank doesn't care about your W-2 — they care about whether the property can pay its own mortgage.

DSCR (Debt Service Coverage Ratio): What Lenders Want to See

Debt Service Coverage Ratio is the metric that gets DSCR loans approved or rejected. Formula: DSCR = NOI ÷ Annual Debt Service. A DSCR of 1.00 means the property breaks exactly even on debt; 1.20 means the property generates 20% more income than the mortgage payment requires. Lender thresholds in 2026: 1.00 = absolute minimum, only some non-QM lenders will go this low and the rate premium is brutal. 1.20 = the standard floor for most DSCR investment loans (Visio, Kiavi, LendingOne, Lima One, Easy Street). 1.25–1.30 = where pricing gets noticeably better — typically 25–50 bps off your rate. 1.30+ = best-tier pricing, especially with 25%+ down. Using our $400K example: NOI $19,440 ÷ debt service $23,948 = 0.81 DSCR — declined by every DSCR lender. To fix a borderline DSCR you have three levers, ranked by effectiveness: (1) more down payment (going from 20% to 30% down on this property pushes DSCR from 0.74 to 0.94 — still short, but the math gets there with rent bumps); (2) raise rents via light value-add (paint, appliances, in-unit laundry) — every $100/mo of new rent adds ~$1,000 to NOI and ~0.05 to DSCR on a typical loan; (3) buy down the rate with discount points if you're holding 5+ years. Watch for lenders who calculate DSCR using market rent versus actual rent — a vacant property can still close on market rent, but the underwriter will want a 1.25+ DSCR on a market-rent basis to offset the lease-up risk.

How experienced investors triage 50 Zillow listings down to 10 worth a deeper look, then to 1 worth an offer — using cap rate, cash-on-cash, DSCR, and gross rent multiplier as a four-step funnel.

Underwriting an Investment Property: A 60-Second Checklist

The point of the calculator is speed. Here's the workflow that separates investors who close 4 deals a year from investors who analyze 400 deals and close zero. Step 1 — GRM screener (10 seconds per listing): Gross Rent Multiplier = Purchase Price ÷ Annual Gross Rent. Anything above 12 in a Sun Belt market or 15 in a tier-1 metro is almost always a pass on a buy-and-hold basis — the rents simply can't support the price. GRM is a fast first filter that doesn't require you to estimate a single expense. Step 2 — Cap rate (60 seconds per listing): if GRM passes, build a quick NOI using the line items in section 1 above and check the cap rate against local comps. Below market by more than 100 bps? Pass, unless there's a clear value-add story (under-rented, mismanaged, deferred capex you can fix). Step 3 — Cash-on-cash (90 seconds): add your actual financing terms — down payment %, rate, amortization. If cash-on-cash is below your hurdle (most buy-and-hold investors target 6–8% in 2026, BRRRR investors target 12%+ post-refi), pass. Step 4 — DSCR (10 seconds): if you're financing with a DSCR loan, confirm DSCR ≥ 1.20 before you spend another minute. Below 1.20 means you'd have to bring extra cash to qualify, which kills your cash-on-cash anyway. Properties that survive all four steps deserve a property tour, comp pull, and a written offer. For the marketing side of the equation — once you own the property and need to advertise the rental — pair this calculator with our listing description generator for the rental ad copy, and read our guide on commercial real estate photography for multi-family listings or the best camera for real estate video guide for STR walkthroughs. Investor-focused agents should also bookmark our real estate marketing guide for agents and consider AI virtual staging for vacant units to cut days-on-market and protect your projected rents.

[ FAQ ]

Questions fréquentes

It depends on the market and property class. In premium urban markets (NYC, SF, Boston) Class A multifamily trades at 4–5% cap rates. Suburban Class B in growth markets (Phoenix, Charlotte, Tampa) typically lands at 6–7%. Smaller-market Class C properties can yield 8–10%+ but with higher operating risk. The right cap rate is the one that reflects your local market's risk-adjusted returns — not a national benchmark.
Cap rate is unlevered — it's NOI ÷ purchase price, ignoring whether you paid cash or financed. Cash-on-cash is the actual return on the cash you put in (down payment + closing costs), accounting for mortgage debt service. Cash-on-cash is usually higher than cap rate when you finance with positive leverage (cap rate > interest rate). This calculator shows both side-by-side.
Net operating income = effective gross income (gross rent minus vacancy) minus all operating expenses (taxes, insurance, HOA, maintenance, management, utilities, other). NOI explicitly excludes mortgage debt service, depreciation, and capital expenditures — those are below-the-line. This calculator computes NOI live as you fill in the expense fields.
Debt service coverage ratio = NOI ÷ annual mortgage payments. A DSCR of 1.0 means the property's NOI exactly covers its mortgage; below 1.0 means it doesn't. Most investment-property lenders want 1.20–1.25 minimum, with 1.30+ getting better terms. If your DSCR is borderline, increasing the down payment or finding a lower-rate loan are the two main ways to push it up.
No. Cap rate is unlevered by definition — NOI ÷ purchase price, regardless of whether you finance. This is what lets you compare two properties on the same playing field even if one is paid in cash and the other is financed. To compare your actual return on cash invested, use cash-on-cash return instead — this calculator shows both.
The math is the same but the inputs differ. For STRs, use a higher vacancy rate (15–35% to model occupancy), include cleaning fees in operating expenses, and if you self-manage, account for the time. Property management for STRs is typically 20–25% of gross revenue (vs 8–10% for long-term rentals). The tool accepts any percentages you enter — just adjust the vacancy and management fields to STR realities.
GRM = purchase price ÷ annual gross rent. It's a quick screening metric — a property at 8× GRM is roughly twice as expensive as one at 4× GRM, holding everything else equal. GRM is faster than cap rate because it doesn't require expense data, but it ignores operating costs, so cap rate is the better metric once you have detailed expense numbers. Use GRM to triage 50 listings down to 10; use cap rate to underwrite the 10.

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