A cap rate isn't a number a broker invents to win your listing. It's built from two things you can actually see: what the bank charges and what the buyer's equity demands. Enter your numbers below and watch it come together.
Almost every apartment purchase is paid two ways: borrowed money and the buyer's own cash. Each source wants a return. The bank wants its debt payment. The buyer's equity wants a cash return worth the risk. Your cap rate is simply the blend of those two demands, weighted by how much of the purchase each one covers.
The debt piece is the share of price that's borrowed, multiplied by the mortgage constant — the full annual loan payment divided by the loan amount, which folds principal and interest together. The equity piece is the share paid in cash, multiplied by the first-year cash-on-cash return a buyer expects. Add the two and you have the indicated cap rate. Divide your NOI by that rate and you have an indicated value.
Change any input and watch the value move — even with your income flat. That's the part worth sitting with: when money gets more expensive, values compress, without a single tenant moving out.
Read the full method: Where your cap rate really comes from →
The calculator uses market averages. I'll build a complimentary Broker's Opinion of Value on your actual property — the way a buyer's underwriting and a lender's appraiser would. No cost, no obligation.
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This tool is for general educational purposes and is not tax, legal, or investment advice. Figures are illustrative and use market-average assumptions. Please consult the appropriate professional regarding your specific situation.