{"success":true,"version":"v1","request":{"tool":"get_calculator_schema","calculator_id":"cap-rate"},"result":{"entity_type":"calculator","id":"cap-rate","calculator_id":"cap-rate","canonical_url":"https://tttkmbb.com/investing/cap-rate","name":"Cap Rate Calculator","title":"Cap Rate Calculator – Capitalization Rate from Net Operating Income and Property Price","category":"investing","category_name":"Investing & Real Estate","tool_name":"calculate_cap_rate","featured_mcp_tool":false,"description":"Computes a property's net operating income from gross income, vacancy and operating expenses, and divides it by the price to get the capitalization rate, alongside the gross yield.","use_when":"You want to compare income properties on unlevered return, or turn an asking price and rent roll into a cap rate.","do_not_use_when":"You want the return on the cash actually invested after mortgage payments (use cash-on-cash-return) or a quick price-to-rent screen (use gross-rent-multiplier). Informational only; not financial advice.","inputs":[{"name":"property_price","label":"Property price (or value)","type":"number","required":true,"max":1000000000000,"exclusive_min":0,"description":"Purchase price or current market value.","example":500000},{"name":"annual_gross_income","label":"Annual gross income","type":"number","required":true,"min":0,"max":1000000000000,"description":"Potential annual rent and other income at full occupancy.","example":30000},{"name":"annual_operating_expenses","label":"Annual operating expenses","type":"number","required":false,"default":0,"min":0,"max":1000000000000,"description":"Taxes, insurance, maintenance, management and utilities paid by the owner (no mortgage payments or depreciation).","example":0},{"name":"vacancy_percent","label":"Vacancy and credit loss","type":"number","unit":"%","required":false,"default":0,"min":0,"max":100,"description":"Share of gross income lost to vacancy and unpaid rent.","example":0}],"outputs":[{"name":"effective_gross_income","label":"Effective gross income","type":"number","decimals":2,"description":"annual_gross_income × (1 − vacancy_percent/100)."},{"name":"net_operating_income","label":"Net operating income (NOI)","type":"number","decimals":2,"description":"effective_gross_income − annual_operating_expenses."},{"name":"cap_rate_percent","label":"Cap rate","type":"number","unit":"%","decimals":2,"description":"net_operating_income / property_price × 100."},{"name":"gross_yield_percent","label":"Gross yield","type":"number","unit":"%","decimals":2,"description":"annual_gross_income / property_price × 100."}],"input_schema":{"type":"object","properties":{"property_price":{"description":"Purchase price or current market value.","type":"number","maximum":1000000000000,"exclusiveMinimum":0,"examples":[500000]},"annual_gross_income":{"description":"Potential annual rent and other income at full occupancy.","type":"number","minimum":0,"maximum":1000000000000,"examples":[30000]},"annual_operating_expenses":{"description":"Taxes, insurance, maintenance, management and utilities paid by the owner (no mortgage payments or depreciation).","type":"number","minimum":0,"maximum":1000000000000,"default":0,"examples":[0]},"vacancy_percent":{"description":"Share of gross income lost to vacancy and unpaid rent. Unit: %.","type":"number","minimum":0,"maximum":100,"default":0,"examples":[0],"x-unit":"%"}},"additionalProperties":false,"required":["property_price","annual_gross_income"]},"output_schema":{"type":"object","properties":{"effective_gross_income":{"description":"annual_gross_income × (1 − vacancy_percent/100).","type":"number"},"net_operating_income":{"description":"effective_gross_income − annual_operating_expenses.","type":"number"},"cap_rate_percent":{"description":"net_operating_income / property_price × 100. Unit: %.","type":"number","x-unit":"%"},"gross_yield_percent":{"description":"annual_gross_income / property_price × 100. Unit: %.","type":"number","x-unit":"%"}}},"formula":"effective_gross_income = annual_gross_income × (1 − vacancy_percent/100); NOI = effective_gross_income − annual_operating_expenses; cap_rate_percent = NOI / property_price × 100; gross_yield_percent = annual_gross_income / property_price × 100","method":"Direct capitalization: NOI excludes financing costs, income taxes, depreciation and capital expenditures, so the cap rate is an unlevered, before-tax yield on the price. Informational mathematics only; not financial advice.","sources":[{"name":"Wikipedia – Capitalization rate","url":"https://en.wikipedia.org/wiki/Capitalization_rate","type":"reference","retrieved_at":"2026-09-24"}],"freshness":{"type":"static","max_age_seconds":null,"note":"Deterministic formula with fixed constants; results never go stale. Inputs supplied by the caller determine the output."},"examples":[{"name":"500,000 price, 30,000 gross income, no expenses","inputs":{"property_price":500000,"annual_gross_income":30000},"expected":{"effective_gross_income":30000,"net_operating_income":30000,"cap_rate_percent":6,"gross_yield_percent":6},"url":"https://tttkmbb.com/api/v1/calculate/cap-rate?property_price=500000&annual_gross_income=30000"},{"name":"1.5 M price, 120,000 gross, 40,000 expenses, 5 % vacancy","inputs":{"property_price":1500000,"annual_gross_income":120000,"annual_operating_expenses":40000,"vacancy_percent":5},"expected":{"effective_gross_income":114000,"net_operating_income":74000,"cap_rate_percent":4.93,"gross_yield_percent":8},"url":"https://tttkmbb.com/api/v1/calculate/cap-rate?property_price=1500000&annual_gross_income=120000&annual_operating_expenses=40000&vacancy_percent=5"}],"faq":[{"q":"Is a higher cap rate better?","a":"It means more income per unit of price, which usually reflects higher perceived risk or lower growth prospects; comparable properties in the same market typically trade in a narrow cap-rate band."},{"q":"Do mortgage payments count as operating expenses?","a":"No. NOI is measured before financing so that properties can be compared regardless of how they are funded; use cash-on-cash-return to include debt service."}],"tags":["cap rate","capitalization rate","net operating income","noi","real estate yield","rental property"],"related":[{"calculator_id":"cash-on-cash-return","reason":"Levered return on the cash invested."},{"calculator_id":"gross-rent-multiplier","reason":"Price-to-rent screening ratio."},{"calculator_id":"rental-yield","reason":"Gross and net yield of a rental home."}],"links":{"html":"https://tttkmbb.com/investing/cap-rate","markdown":"https://tttkmbb.com/investing/cap-rate.md","json":"https://tttkmbb.com/investing/cap-rate.json","api":"https://tttkmbb.com/api/v1/calculate/cap-rate","schema":"https://tttkmbb.com/api/v1/calculators/cap-rate","openapi":"https://tttkmbb.com/openapi.json","mcp":"https://tttkmbb.com/mcp"},"version":"v1","updated_at":"2026-09-24"},"timestamp":"2026-09-24T03:44:39Z","next_actions":[{"tool":"run_calculator","calculator_id":"cap-rate","reason":"Run Cap Rate Calculator with the inputs above."}],"links":{"markdown":"https://tttkmbb.com/investing/cap-rate.md"}}