Find a property's net operating income and cap rate, then see the most you can pay and still hit the cap rate you want.
Leave the mortgage out. Cap rate measures the property, not your financing.
The capitalization rate is the yield a property would produce if you bought it with all cash. Because it ignores financing, it lets you compare properties on equal footing: a duplex in one town against a single-family home in another, or this listing against what similar rentals sold for. A higher cap rate means more income for each dollar of price, and usually more risk or more work.
Annual rent at full occupancy, then subtract a vacancy allowance. 5–8% is typical for single-family rentals.
Taxes, insurance, repairs, management, HOA and any owner-paid utilities. Never the mortgage. What's left is NOI.
NOI ÷ price is the cap rate. Flip it around, NOI ÷ target cap rate, and you get the price that makes the deal work.
Deal Snap REI Pro shows cap rate, cash-on-cash and DSCR on every Zillow listing you open, using the listing's real taxes and HOA, and checks each one against your buy box.
Install the Chrome Extension — FreeThere's no single answer. In many U.S. markets, single-family rentals trade around 5–8%, with higher cap rates in lower-cost or higher-risk areas and lower ones in expensive, stable markets. Compare a deal with recent sales of similar properties nearby.
No. Cap rate is calculated before debt service so it reflects the property alone. To see how your financing changes the return, use cash-on-cash return or the rental cash flow calculator.
Not always. A high cap rate can mean a great price, or it can mean a tough neighborhood, an older building with big repairs ahead, or rents that are hard to collect. Use cap rate to rank deals, then dig into why the numbers look the way they do.
Decide the cap rate you need, estimate NOI, and divide: NOI ÷ target cap rate = maximum price. If NOI is $14,800 and you want 8%, you can pay up to $185,000.