Rental Property Investment & Cap Rate Calculator
Analyze the investment returns of a residential or commercial rental property, including Net Operating Income (NOI), Capitalization Rate (Cap Rate), and Cash-on-Cash return.
Sensitivity Analysis
Evaluate how variations in key operational drivers impact Net Monthly Cash Flow.
| Sensitivity Case | Assumption Shift | Driver Value | Net Monthly Cash Flow | Impact vs Base |
|---|
Formula & Methodology
Cap Rate (%) = (NOI / Property Price) * 100Purchase PricePurchase price + initial renovation costs.
Gross RentGross expected monthly rent.
Operating ExpensesProperty taxes, insurance, maintenance, vacancy allowance, management fees.
Practical Worked Example
An investor buys an Rs 50,00,000 apartment renting for Rs 30,000/month with Rs 60,000 annual expenses and a 25% down payment.
Interpretation & Industry Benchmarks
Cap Rate is the standard commercial real estate valuation metric to compare property yields across markets.
Healthy cash flow return relative to asset price.
Low cash yield compensated by higher expected capital appreciation.
Industry Nuance: In Indian metro cities (Mumbai, Bengaluru), residential rental yields are typically 2.5%–3.5%, while commercial office yields are 7%–9%.
Analytical Limitations
- Does not include long-term capital appreciation or capital expenditure (CapEx) reserves.
Frequently Asked Questions
What is Cap Rate?
Capitalization Rate (Cap Rate) is the ratio of Net Operating Income (NOI) to property purchase price, reflecting the unleveraged annual return.