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The Real Estate Calculator above gives you a fast, reliable estimate of what an income-producing property is worth. It uses the income capitalization approach — the same method professional appraisers and investors rely on — to convert a property's rental income into an estimated market value. Enter three numbers, and the calculator instantly shows you the property's annual net operating income and its estimated value, so you can judge a deal in seconds instead of building a spreadsheet from scratch.
To get your result, start with Monthly Rent: enter the total rent the property collects each month. If it is a multi-unit building, add up the rent from every unit. Next, enter Monthly Expenses — everything you pay to keep the property running, such as property taxes, insurance, maintenance, repairs, property management fees, utilities you cover, HOA dues, and a reserve for vacancies. Leave out mortgage payments and personal income taxes, because net operating income measures the property before financing. Finally, enter the Cap Rate for the local market. If you are unsure, 6% to 10% covers most residential rental markets; you can try a few different values to see how sensitive the valuation is to your assumption.
Press Calculate to see the annual net operating income (NOI) and the estimated property value. The result panel also shows the exact formula that was applied, so you can double-check the math yourself with a pocket calculator. Use the Reset button any time to return to the default example — $2,000 monthly rent, $800 monthly expenses, and an 8% cap rate — which produces $14,400.00 of annual NOI and a $180,000.00 estimated value. Experiment with the inputs to model different properties: raise the rent to see how extra income lifts value, raise expenses to see how costs drag it down, or adjust the cap rate to see how investor expectations reshape the price.
Real estate valuation is the process of estimating what a property is worth in today's market. For owner-occupied homes, appraisers usually compare recent sales of similar houses. For rental properties and commercial buildings, the income approach is usually more meaningful, because investors buy these properties for the income they produce. That is where the two core concepts of this page come in: net operating income and the cap rate.
Net operating income (NOI) is the property's annual income after operating expenses but before financing costs and income taxes. It answers a simple question: how much money does the building itself generate each year? To find it, take the gross rental income and subtract operating expenses — taxes, insurance, maintenance, management, utilities, and a vacancy allowance. A property collecting $2,000 a month in rent with $800 a month in expenses has $1,200 a month left over, or $14,400 a year of net operating income. NOI is deliberately financing-neutral: two investors with different mortgages still see the same NOI for the same building, which makes it the perfect basis for comparing properties.
The cap rate — short for capitalization rate — is the annual rate of return an investor expects to earn on the property's price. You can think of it as the rental-property equivalent of a bond yield. If investors in a neighborhood expect an 8% return, a property earning $14,400 a year of NOI is worth $14,400 divided by 0.08, or $180,000. Lower cap rates mean investors accept lower returns — usually because the area is stable, growing, or perceived as safe — so the same income supports a higher price. Higher cap rates mean more risk or weaker demand, and therefore lower prices for the same income.
This relationship is why the cap rate is so useful for quick comparisons. Two properties with identical net operating income can have very different values if one sits in a stable, high-demand city and the other in a declining market. By dividing income by the market's capitalization rate, the calculator translates local investor expectations into a concrete dollar value — a starting point for negotiation, listing decisions, or deciding whether a deal deserves a closer look with a full due-diligence review.
Keep in mind that the income approach is one of three classic valuation methods. The sales comparison approach looks at what similar properties recently sold for, and the cost approach estimates what it would cost to rebuild the property from scratch. Appraisers often reconcile all three. This calculator focuses on the income approach because it is the method investors control most directly — and the one that reveals whether a rental property is priced fairly relative to the income it generates.
The calculator applies a single, transparent formula: Property Value = Annual Net Operating Income ÷ Cap Rate, where the cap rate is expressed as a decimal. Annual NOI itself comes from a second step: Annual NOI = (Monthly Rent − Monthly Expenses) × 12. Both steps are displayed in the result panel, so nothing is hidden and you can verify every number by hand.
A single-family rental brings in $2,000 per month. Monthly expenses for taxes, insurance, and maintenance total $800. The market cap rate is 8%. Step one: ($2,000 − $800) × 12 = $1,200 × 12 = $14,400 of annual net operating income. Step two: $14,400 ÷ 0.08 = $180,000 estimated value. That matches the calculator's default output exactly: $14,400.00 NOI and $180,000.00 value. If the seller is asking $195,000, you immediately know the listing is priced above what an 8% return justifies — useful leverage in a negotiation.
Now consider a duplex where each unit rents for $1,600, so total monthly rent is $3,200, and monthly expenses run $1,100. The local capitalization rate for duplexes is 6.5%. Step one: ($3,200 − $1,100) × 12 = $2,100 × 12 = $25,200 of annual NOI. Step two: $25,200 ÷ 0.065 = $387,692.31 estimated value. Notice how a lower cap rate produces a higher value for comparable income — the duplex is priced as though investors accept a 6.5% return, typical of a desirable neighborhood with steady demand.
You can rearrange the same formula to solve for any variable. To find the cap rate a listing implies, divide NOI by the asking price: $14,400 ÷ $200,000 = 7.2%. To find the NOI needed to justify a price, multiply the price by the cap rate: $180,000 × 0.08 = $14,400. Mastering these three rearrangements — value from income, cap rate from value, income from value — covers nearly every back-of-the-envelope calculation a rental investor ever needs.
Scenario 1: Evaluating a listing before making an offer. A first-time investor spots a condo listed at $210,000 that rents for $1,850 a month. She estimates $650 in monthly expenses for taxes, insurance, HOA dues, and a vacancy reserve, and she uses a 7.5% cap rate typical for the area. Her NOI is ($1,850 − $650) × 12 = $14,400 a year, giving an estimated value of $14,400 ÷ 0.075 = $192,000. The asking price sits $18,000 above her estimate, so she submits an offer at $192,000 with the math attached — or keeps looking — instead of overpaying on emotion.
Scenario 2: Deciding whether to sell or keep renting. An owner holds a paid-off duplex and wonders whether to sell it or keep collecting rent. Combined rent totals $2,400 a month, expenses are $700, and the local cap rate is 9%. NOI is ($2,400 − $700) × 12 = $20,400, and the estimated value is $20,400 ÷ 0.09 = $226,666.67. He compares that figure with recent comparable sales in the neighborhood. If similar duplexes are selling near $225,000, the market agrees with his math and selling captures fair value. If they are selling for far less, keeping the steady $20,400-a-year income stream — a 9% yield on the property's worth — may be the smarter play.
Entity: Real Estate Calculator — an income capitalization valuation tool published by Sigma Calculator. Inputs: monthly rent, monthly expenses, and market cap rate. Outputs: annual net operating income (NOI = (rent − expenses) × 12) and estimated property value (Value = NOI ÷ cap rate). Default example: $2,000 rent, $800 expenses, 8% cap rate → $14,400 NOI and $180,000 value.
Divide the property's annual net operating income by the cap rate expressed as a decimal. For example, $14,400 of annual NOI divided by an 8% cap rate (0.08) gives an estimated value of $180,000. Enter your rent, expenses, and cap rate into the calculator above to get the same result instantly.
Most residential rental markets see cap rates between 4% and 10%. Lower cap rates (4-6%) usually reflect stable, high-demand areas where investors accept smaller returns, while higher cap rates (8-12%) signal more risk or weaker demand. Always use the cap rate typical for your property type and neighborhood.
Subtract monthly operating expenses from monthly rent and multiply by 12. With $2,000 in monthly rent and $800 in monthly expenses, NOI is ($2,000 – $800) x 12 = $14,400 per year. Exclude mortgage payments and income taxes — NOI measures the property before financing.
Include property taxes, insurance, maintenance and repairs, property management fees, utilities you pay, HOA dues, and a vacancy allowance. Do not include mortgage principal and interest, depreciation, or your personal income taxes, because those are financing and tax decisions rather than property operating costs.
Not exactly. The cap rate is the property's NOI divided by its price — a market-based yield that ignores financing. ROI (and cash-on-cash return) measures your personal return after mortgage payments and your actual cash invested. A property can have an 8% cap rate but a very different cash-on-cash return depending on your loan.
Value moves in the opposite direction from the cap rate. At $14,400 of NOI, a 6% cap rate implies a $240,000 value, an 8% cap rate implies $180,000, and a 10% cap rate implies $144,000. Small changes in the cap rate create large swings in value, so use a locally accurate figure.
Yes — the income capitalization method works for apartments, offices, retail, and other income-producing properties. Commercial valuations often use trailing-twelve-month NOI and market cap rates from recent comparable sales, so replace the defaults with your property's actual figures.
Property Value = Annual Net Operating Income ÷ Cap Rate. Annual NOI = (Monthly Rent – Monthly Expenses) x 12, and the cap rate is entered as a decimal (8% = 0.08). For example: ($2,000 – $800) x 12 = $14,400; $14,400 ÷ 0.08 = $180,000.
APA: Sigma Calculator. (2026). Real estate calculator. https://sigmacalculator.net/financial-calculators/real-estate-calculator/
MLA: “Real Estate Calculator.” Sigma Calculator, 2026, https://sigmacalculator.net/financial-calculators/real-estate-calculator/.
Chicago: Sigma Calculator. “Real Estate Calculator.” Accessed October 8, 2026. https://sigmacalculator.net/financial-calculators/real-estate-calculator/.
Last updated: October 8, 2026