Property Capitalisation Rate Calculator

This calculator works out the capitalisation rate, or cap rate, for a New Zealand investment property, the shorthand investors use most often to compare income-producing properties on a like-for-like basis. You enter two figures: the property's net operating income, meaning the annual rental income left once operating costs such as rates, insurance, property management and maintenance have been deducted, before any mortgage repayments, and the property's current market value. The calculator divides the net operating income by the market value and multiplies by 100 to return the property capitalisation rate as a percentage. Using current market value rather than the original purchase price matters, because it removes any advantage from buying early or late in a rising market, letting you compare a property bought years ago with one on the market today purely on how it performs relative to what it is worth right now. A higher cap rate generally signals a higher-yielding property, though it often comes with higher risk or a less sought-after location, while a lower cap rate usually reflects a lower-risk asset. Use this figure to shortlist properties, sanity-check a listing agent's numbers, or track how a property's performance changes over time as rents and values move. Because it ignores financing costs, capital growth and vacancy risk, treat the result as one indicative comparison metric rather than a complete investment analysis.

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