Interactive Lab
Cap Rate Simulator
Cap Rate Simulator
Change NOI and price to see the cap rate move, and see how the same NOI is valued at different market cap rates.
$300,000
$
$5,000,000
$
Resulting Cap Rate
6.00%
NOI ÷ Property Value
Sensitivity: what would this exact $300,000 NOI be worth at other market cap rates?
| Cap Rate | Implied Value |
|---|---|
| 4.00% | $7,500,000 |
| 5.00% | $6,000,000 |
| 6.00% (current) | $5,000,000 |
| 7.00% | $4,285,714 |
| 8.00% | $3,750,000 |
Notice that value and cap rate always move in opposite directions for a fixed NOI — a lower cap rate means a higher value (cap rate compression), and a higher cap rate means a lower value (cap rate expansion).
Learn the concept behind this tool