Calculate cap rate, NOI, and gross rent multiplier.
To calculate cap rate and GRM:
The calculator returns the net operating income (NOI), capitalization rate, and gross rent multiplier (GRM) for quick comparison.
Key investment formulas:
NOI = Gross Income − Operating ExpensesCap Rate = (NOI ÷ Property Value) × 100GRM = Property Value ÷ Gross Annual IncomeCap rate excludes financing costs — it measures property performance independent of how you pay for it.
Example: $500,000 property, $60,000 annual income, $20,000 expenses.
$60,000 − $20,000 = $40,000($40,000 ÷ $500,000) × 100 = 8.0%$500,000 ÷ $60,000 = 8.33Cap rates vary by market and property type. Generally, 4–6% is typical in high-demand urban areas, 6–8% in suburban markets, and 8–12% in higher-risk or rural areas. A higher cap rate means higher potential return but often higher risk.
Gross Rent Multiplier (GRM) is a quick screening metric. A lower GRM means you pay less per dollar of gross rent. It's useful for quickly comparing properties but doesn't account for expenses, so always check the cap rate too.
No. Cap rate measures property performance independent of financing. It uses NOI (income minus operating expenses) but excludes mortgage principal and interest. This makes it useful for comparing properties regardless of how they're financed.