DSCRCap rate calculator
Enter your net operating income and property value to get the capitalization rate, which is the unlevered yield of a rental property.
NOI = gross annual rent − operating expenses (taxes, insurance, management, maintenance vacancy), not the mortgage payment. Cap rate measures unlevered return.
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The cap rate formula
NOI = gross annual rent minus operating expenses (taxes, insurance, management, maintenance, vacancy). It excludes the mortgage payment. Cap rate tells you the unlevered yield, the return if you owned the property free and clear. The default above, $18,000 NOI on a $350,000 property, works out to about 5.1%.
What cap rate signals a cash-flow market
Cap rate is one of four inputs in our Investor Yield Index, which ranks 18 U.S. metros on live Zillow data. The strongest-ranked markets sit in the 7 to 8% range on gross cap rate, while the pricey coastal and Sun Belt metros land closer to 4%. Only the cheapest clear a 1.2 DSCR at current rates, so a high cap rate today is a relative signal, not a guarantee of positive cash flow.
Index figures use live Zillow data, not lender quotes. See the full ranking →
Common questions
How is cap rate calculated?
Cap rate = net operating income ÷ property value. NOI is gross annual rent minus operating expenses (excluding the mortgage). It measures unlevered return.
What is a good cap rate?
It depends on market and risk. In 2026, 5 to 7% is common for solid single-family rentals, while 8% or more usually shows up only in cheaper, riskier markets. See what is a good cap rate for detail.
Does cap rate include the mortgage?
No. Cap rate is an unlevered metric, so it ignores financing. For your return with a mortgage, use cash-on-cash return instead.