Cap rate and property value

Enter net operating income with either a price or a target cap rate, and we will solve the rest.

Net operating income (NOI) / yr

Income less operating expenses, before financing.

Price or value (optional)

Target cap rate % (optional)

Fill price OR a target cap rate.

Number of units (optional)

Cap rate

Implied value from target cap rate-

Price per unit-

NOI per unit-

Value if cap rate is 0.25% lower-

Value if cap rate is 0.25% higher-

Cap rate is NOI divided by value. It is a quick yardstick, not an appraisal; lenders and CMHC use reviewed income and their own valuation.

Talk to us

For illustration only and not an appraisal, a valuation, or an offer of financing. Cap rate is a simple ratio of net operating income to price or value; actual value depends on the market, the asset, reviewed income, and a formal appraisal. Speak with us for a real assessment. TMG HarbourTown Mortgage Inc., Licence #3000145.

What these numbers mean

Plain-language definitions and the typical ranges, so you can play with the inputs with confidence.

Net operating income (NOI): Rental and other income from the property less operating expenses (taxes, insurance, utilities, maintenance, management, reserves), before any mortgage payment. Cap rate, value, and the financing a property can carry all start here.
Typical: use realistic, sustainable income and a full expense load; understating expenses inflates both NOI and value.
Price or value: What the property sells for or is worth. Enter it to solve for the cap rate the deal is priced at.
Typical: lenders rely on a formal appraisal and their own reviewed income, which can land below an asking price.
Target cap rate: The cap rate you want to price the deal at. Enter it instead of a price to solve for the value that NOI implies. Value and cap rate move inversely, so a lower cap rate means a higher value for the same income.
Typical: cap rates vary widely by asset class, location, age, and condition; small shifts move value a lot, which the sensitivity rows show.
Number of units: Optional. Used to show price per unit and NOI per unit, two quick comparison metrics for multi-residential and similar assets.
Typical: helpful for benchmarking against comparable buildings in the same market.
Cap rate (NOI / value): NOI divided by price or value, as a percent. A quick yardstick for how richly a property is priced relative to its income. It is not an appraisal, a return, or a financing decision on its own.
Typical: a 25 basis point move in the cap rate can change the implied value materially, which is why the deal hinges on getting NOI right.

These are general ranges, not your numbers. The right figure depends on your situation, the property, and the lender. Talk to us and we will pin it down.