Interactive tool
Cap Rate Calculator for Multifamily
Model stabilized income, operating expenses, and implied market cap rates for commercial apartment buildings.
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NOI & Cap Rate
Enter your property
All units, 12 months
Typical: 5–8%
% of EGI
Optional
% of gross rent
% of gross rent
Optional
Results
Cap Rate
7–9% — strong cash flow
- Income
- Gross scheduled income
- $36,000
- Less vacancy loss
- ($1,800)
- Effective gross income
- $34,200
- Operating expenses
- Property tax
- $3,600
- Insurance
- $1,200
- Management
- $2,736
- Maintenance
- $1,800
- CapEx reserve
- $1,800
- Total operating expenses
- $11,136
- Net operating income
- NOI
- $23,064
- Cap Rate
- 7.69%
Cap Rate = NOI ÷ Purchase Price. NOI excludes mortgage payments — it is a property-level metric, independent of financing. Use it to compare properties on equal footing; use cash-on-cash to evaluate levered returns.
Cap rate benchmarks by market type
| Cap rate range | Market type | Investor profile |
|---|---|---|
| 3–4% | Gateway cities (NYC, LA, SF) | Appreciation-driven; high entry price |
| 4–6% | Primary metros (Atlanta, Phoenix, Denver) | Balanced — appreciation + moderate cash flow |
| 6–8% | Secondary / tertiary markets (Cleveland, Memphis) | Cash-flow-focused; lower appreciation |
| 8%+ | Rural or high-vacancy markets | High yield — verify vacancy and exit assumptions |
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Related Resources
Hand-picked next steps — go deeper on this topic, compare alternatives, or run the numbers.
Guide
NOI Normalization for Real-World Underwriting
Detailed NOI normalization guide for multifamily acquisitions, refinances, and debt sizing conversations.
Guide
Multifamily Underwriting Basics for 5+ Unit Deals
Comprehensive underwriting framework for US commercial multifamily acquisitions and refinances on 5+ unit properties.
Guide
Five-Plus Unit Commercial Financing Basics
Why US multifamily financing changes at five units—commercial vs residential lending boundaries, products, and underwriting for apartment investors.
Property type
Garden-Style Multifamily Financing Guide
Underwriting and debt execution guide for Garden-Style Multifamily assets in US multifamily financing (minimum 5 units).
Property type
Value-Add C-Class Multifamily Financing Guide
Underwriting and debt execution guide for Value-Add C-Class Multifamily assets in US multifamily financing (minimum 5 units).
Comparison
Agency vs Bridge for Multifamily
Decision framework comparing Agency Debt and Bridge Debt for US multifamily financing execution on 5+ unit assets.
How to calculate cap rate for multifamily
Cap rate expresses how much annual NOI a property produces relative to its price. For commercial multifamily (5+ units), the core formula is:
Cap Rate = NOI ÷ Property Value
To solve for value instead: Property Value = NOI ÷ Cap Rate. Always use normalized NOI—gross income minus vacancy, concessions, and operating expenses—before applying the formula.
Worked example: 48-unit garden-style apartment
A sponsor underwrites a 48-unit garden-style property in a Sun Belt market. Effective gross income is $1,152,000 after vacancy and concessions. Operating expenses total $432,000, producing NOI of $720,000. The seller asks $12,000,000.
- Implied cap rate: $720,000 ÷ $12,000,000 = 6.0%
- If market comps support a 5.75% cap, implied value = $720,000 ÷ 0.0575 ≈ $12.5M
Lenders may haircut revenue or stress expenses, which lowers NOI and raises the effective cap rate on their value opinion. Pair this output with the debt yield calculator and NOI normalization guide.