CAPRATE

Reverse Cap Rate Calculator Property Value

Estimate property value from NOI and market cap rate with a reverse cap rate calculator based on the income capitalization approach.

Instant Results
Expert Verified
100% Free
Estimated Property Value
$1,090,909
Price per $1 NOI
$18.18
Yield Focus
5.5%

Valuation Tip: The Cap Rate represents the market's required yield. A lower Cap Rate results in a higher property value, reflecting lower perceived risk or higher demand for the asset.

When is this number not an offer?

This estimated value is annual NOI divided by the market cap rate — income capitalization, also called reverse cap rate. It is not an offer, an appraisal, or an AVM.

Do not treat this dollar figure as a price you can use when:

  • The property is owner-occupied or has no NOI to capitalize.
  • You are pricing vacant land.
  • The deal is development or construction, not a stabilized income stream.
  • You want a Zillow-style home price from an address rather than an income value.

The cap rate has to be a market yield for similar income property, not a made-up number. One place to look up city benchmarks: cap rates by city

If you do not have annual NOI yet, calculate NOI first and come back with that figure.

Income capitalization
Property Value = Annual NOI / (Cap Rate / 100)

Want the default numbers walked through?

The calculator starts with $60,000 of annual NOI and a 5.5% market cap rate. $60,000 ÷ 5.5% = $1,090,909 (value in USD). Annual NOI stays in dollars, the cap rate stays a percent, and the result is a dollar value.

Annual NOIMarket Cap RateEstimated Value
$50,0005.0%$1,000,000
$150,0006.5%$2,307,692
$250,0008.0%$3,125,000
$500,0004.5%$11,111,111

What should you do with this value?

Change the cap rate on this calculator to see how quickly the estimated value moves. If you do not have annual NOI yet, get that number first — this page cannot invent it.

Calculate NOI

How do I estimate value from NOI and a cap rate?

  1. 1

    Start with annual NOI

    You need a yearly Net Operating Income, not a guess. Include operating expenses such as taxes, insurance, and management. If you do not have NOI yet, calculate it first, then return here.

  2. 2

    Use a market cap rate

    Pick a yield that similar income properties actually trade at. Recent sales in the same area are the usual source. Location, property type, and tenant quality change that rate — do not invent one.

  3. 3

    Divide NOI by the cap rate

    That quotient is the estimated value on this page. Change the cap rate to see the dollar figure move. Treat it as an income-based check, not an offer, appraisal, or AVM.

Frequently Asked Questions

What is the most accurate way to find a market Cap Rate?
Look at recent closed sales of similar income properties in the same submarket. Brokers often publish market reports with average cap rates. A commercial appraiser or broker with CoStar or Reonomy access can also help.
How does a 1% change in Cap Rate affect property value?
A 1% change in Cap Rate can have a massive impact on valuation. For example, a property with $100,000 NOI is worth $2,000,000 at a 5% cap rate. If the cap rate expands to 6%, the value drops to ~$1,666,667—a loss of over $333,000 in equity. This sensitivity is why understanding market cycles is crucial.
Should I use the 'Pro Forma' or 'Actual' NOI for valuation?
Look at both, but this kind of value is usually based on trailing 12-month (T12) actuals. Pro forma NOI is the potential income after improvements, which is useful for yield on cost. Lenders and sellers usually price the current value from the income the property is generating now.