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Cap Rate Calculator for Multifamily

Calculate your property's capitalization rate instantly. Understand how your multifamily investment compares to market benchmarks.

Calculate Cap Rate

Total revenue minus operating expenses, excluding debt service and capital expenditures

$

Current market value or acquisition price of the property

$

Result

Enter NOI and property value to calculate your cap rate

Cap Rate Benchmarks for Multifamily

< 4%
Premium / Core
4 - 6%
Typical Urban
6 - 8%
Suburban / Value-Add
> 8%
High Yield / Risk

Cap rates vary significantly by market, asset class, and economic conditions. These ranges reflect general multifamily benchmarks as of 2024-2025. Always compare to local market comps.

How Cap Rate Is Calculated

Cap Rate = Net Operating Income / Property Value

Net Operating Income (NOI)

Total revenue from the property minus all operating expenses. Operating expenses include property management, maintenance, insurance, taxes, and utilities — but exclude debt service and capital expenditures.

NOI = Gross Revenue - Operating Expenses

Property Value

The current market value or acquisition price. For existing assets, use a recent appraisal or broker opinion of value. For acquisitions, use the asking or contract price.

Value = NOI / Cap Rate (inverse formula)

Why Cap Rate Matters for Multifamily

Investment Comparison

Cap rate provides a standardized, unlevered metric to compare properties regardless of financing structure. Essential for comparing deals across markets and asset types.

Market Positioning

Understanding your portfolio's cap rate relative to the market tells you if properties are over- or under-valued. Track cap rate compression or expansion over time.

Disposition Timing

Cap rate trends signal when to buy or sell. Compressing cap rates mean rising values — a potential exit signal. Expanding cap rates can signal buying opportunities.

This calculator shows one property.
Cai shows your entire portfolio.

BubbleGum BI tracks cap rates, NOI, and valuation metrics across every property in your portfolio — updated daily with market intelligence and trend analysis.

Schedule a Demo

Want to go deeper? Read our comprehensive cap rate guide for market benchmarks by city, cap rate compression drivers, and how to evaluate acquisitions using cap rates.

Frequently Asked Questions

What is a good cap rate for multifamily?
Cap rates vary by market, asset class, and risk profile. Premium urban core assets often trade at 3.5-4.5%, typical urban/suburban properties at 4.5-6.5%, and value-add or secondary market deals at 6-9%+. A "good" cap rate depends on your investment strategy and risk tolerance.
What is the difference between cap rate and cash-on-cash return?
Cap rate measures the unlevered return on the total property value (NOI / Property Value) and does not account for financing. Cash-on-cash return measures the levered return on actual equity invested (Cash Flow After Debt Service / Total Cash Invested). A property can have a low cap rate but high cash-on-cash return with favorable leverage.
Why are multifamily cap rates so compressed?
Multifamily cap rates have compressed due to strong institutional demand, favorable agency financing (Fannie Mae, Freddie Mac), consistent rent growth, and the asset class being viewed as lower risk compared to office or retail. Supply-constrained markets see the most compression.
How does cap rate relate to property valuation?
Cap rate and property value are inversely related. A lower cap rate implies higher valuation for the same NOI. You can estimate value using the formula: Property Value = NOI / Cap Rate. For example, a property generating $500,000 NOI at a 5% cap rate is valued at $10,000,000.
Should I use actual or pro forma NOI for cap rate?
For acquisition analysis, use trailing 12-month (T12) actual NOI to understand current performance. Sellers often present pro forma NOI reflecting projected rents or reduced expenses. Understanding both gives you the going-in cap rate (actual) and stabilized cap rate (pro forma) for comparison. BubbleGum BI tracks both metrics across your portfolio automatically.