Net Cap Rate Calculator

Formula

The formula to calculate the Net Cap Rate (NCR) is:

\[ \text{NCR} = \frac{\text{Net Operating Income}}{\text{Current Market Value}} \]

Where:

$ \text{NCR} $ is the Net Cap Rate
$ \text{Net Operating Income} $ is the income generated from operations after expenses
$ \text{Current Market Value} $ is the current value of the asset or property

What is Net Cap Rate?

Net Cap Rate (NCR) is a financial metric used in real estate and investment analysis to evaluate the profitability of an investment property. It measures the ratio of net operating income (NOI) to the current market value (CMV) of the property.

Example Calculation

Suppose the Net Operating Income (NOI) is $50,000 and the Current Market Value (CMV) is $1,000,000.

To calculate the Net Cap Rate:

\[ \text{NCR} = \frac{50,000}{1,000,000} = 0.05 \text{ (or 5%)} \]

Therefore, the Net Cap Rate is 5%.