Cap Rates From 2% to 12%, in Real Numbers

The same property is worth very different amounts at different cap rates, and needs very different rent to justify the same price. This table shows both on a $500,000 rental. Pick a cap rate for the full breakdown.

$500,000 property, 5% vacancy, taxes 1.2% and insurance 0.5% of price, 18% of collected rent for maintenance, reserves and management. Value column uses $20,000 of NOI.
Cap rate	NOI needed at $500,000	Rent needed	Value of $20k NOI	Read as
2%	$10,000	$1,980	$1,000,000	Low
3%	$15,000	$2,515	$666,667	Low
4%	$20,000	$3,050	$500,000	Moderate
4.5%	$22,500	$3,315	$444,444	Moderate
5%	$25,000	$3,585	$400,000	Moderate
5.5%	$27,500	$3,850	$363,636	Moderate
6%	$30,000	$4,120	$333,333	Solid
6.5%	$32,500	$4,385	$307,692	Solid
7%	$35,000	$4,655	$285,714	Solid
7.5%	$37,500	$4,920	$266,667	Solid
8%	$40,000	$5,190	$250,000	High
9%	$45,000	$5,725	$222,222	High
10%	$50,000	$6,260	$200,000	Very high
12%	$60,000	$7,330	$166,667	Very high

The example property at $4,250 rent has a 6.2% cap rate. Run your own in the cap rate calculator, or see how cap rate moves with price on the purchase price pages.