Cap rate & NOI calculator
Cap rate is net operating income (NOI) divided by property value, expressed as a percentage — the standard shorthand for a property's unleveraged return. Enter revenue, expenses, and value to compute NOI and cap rate, then compare against typical NY and FL benchmarks by asset class.
Market cap rate benchmarks by asset class
These are the midpoint benchmarks Relendi's underwriting engine uses to flag deals priced above or below market:
| Asset class | NY | FL |
|---|---|---|
| Residential | 5.0% | 5.5% |
| Mixed-Use | 5.5% | 6.0% |
| Office | 6.0% | 6.5% |
| Hotel | 7.0% | 7.5% |
| Retail | 6.0% | 6.5% |
| Industrial | 5.5% | 6.0% |
| Self-Storage | 6.0% | 6.5% |
Cap rate is one input among several — pair it with the DSCR calculator to see whether the property's income actually supports the debt needed to hit your target return.
Frequently asked questions
What is a cap rate and how is it calculated?
Capitalization rate (cap rate) is net operating income divided by property value, expressed as a percentage. It's a quick measure of the unleveraged annual return a property generates — a $510,000 NOI property valued at $8M has a 6.375% cap rate.
What's a "good" cap rate for commercial real estate?
There's no universal answer — cap rate reflects risk and growth expectations, not just return. Lower cap rates (5–6%) are typical for stabilized, well-located assets like NY multifamily; higher cap rates (7%+) are typical for hotels and secondary markets, reflecting higher perceived risk or operating volatility.
How does cap rate differ between NY and FL?
NY commercial cap rates typically run 0.5 points lower than FL for the same asset class, reflecting NY's deeper capital markets and lower perceived risk. For example, typical office cap rates run around 6.0% in NY versus 6.5% in FL.
What is the relationship between cap rate and property value?
For a fixed NOI, a lower cap rate implies a higher property value, since value equals NOI divided by cap rate. This is why cap rate compression (rates falling) drives property values up even when income stays flat, and why rising cap rates put downward pressure on valuations.
What is expense ratio and why does it matter?
Expense ratio is annual operating expenses divided by gross revenue. It varies by asset class — industrial properties often run 30% while hotels can exceed 60% due to staffing and operations. A ratio far outside the norm for the asset class is worth investigating before relying on the NOI.
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