Cap rate & gross rent multiplier calculator
Two quick ways to compare rental properties: cap rate (return before financing) and GRM (price per dollar of rent).
Cap rate
6.58%
Gross rent multiplier
9.92
- Gross annual rent
- $50,400
- NOI (yearly)
- $32,880
How this is calculated
- 1Gross annual rent = monthly rent × 12.
- 2NOI = gross annual rent × (1 − vacancy %) − operating expenses.
- 3Cap rate = NOI ÷ price.
- 4GRM = price ÷ gross annual rent.
Neither metric accounts for financing. Use the rental cash flow calculator to see returns with a mortgage.
Frequently asked questions
- How do I calculate a cap rate from monthly rent?
- Multiply rent by 12, subtract vacancy and yearly operating expenses to get NOI, then divide NOI by the price. The calculator does all three steps.
- Which expenses go into the cap rate?
- Operating expenses: property tax, insurance, repairs, management, utilities you pay and HOA dues. Not the mortgage payment, depreciation or income taxes.
- Why does the calculator show GRM too?
- The gross rent multiplier needs only price and rent, so it's a quick first filter. Cap rate takes more work but accounts for expenses.
- Why is my cap rate lower than the listing says?
- Listings often use projected rents, leave out vacancy, or skip expenses like management and repairs. Rebuild the numbers yourself with realistic expenses.
- Can I compare cap rates between cities?
- Carefully. Cap rates are usually lower in expensive, fast-growing areas and higher in cheaper or riskier ones. Compare against similar properties in the same area.