What is this property worth?
Estimate the market value of any income-producing property using NOI and the prevailing market cap rate — then compare against the asking price.
Why do real estate investors use the Capitalized Value?
Because it provides an objective estimate of a property's market value based on its income-generating potential.
By applying a market-derived capitalization rate to the property's Net Operating Income (NOI), investors can determine what the property should be worth, independent of its current listing price. This allows you to verify if a property is priced efficiently or if there is a discrepancy between the asking price and market reality.
Capitalized value
Enter property details to estimate what the market says this property should be worth.
Capitalized value
Enter property income and expense details. NOI is calculated automatically, then divided by the Market Cap Rate to estimate value.
Value Analysis
Estimated market value and pricing gauge.
Awaiting your figures
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Capitalized Value
Why do real estate investors use the Capitalized Value?
Because it provides an objective estimate of a property's market value based on its income-generating potential.
By applying a market-derived capitalization rate to the property's Net Operating Income (NOI), investors can determine what the property should be worth, independent of its current listing price. This allows you to verify if a property is priced efficiently or if there is a discrepancy between the asking price and market reality.
Capitalized Value
Commercial office building using sample annual figures.
Net Operating Income (NOI)
NOI is calculated in sub-steps before arriving at the Capitalized Value.
- Potential Rent Income$300,000
- Less Vacancy (5% of $300,000)($15,000)
- Effective Gross Income (EGI)$285,000
- Plus Other Income ($5,000 + $5,000 + $2,000 + $2,000 + $1,000)$15,000
- Gross Operating Income (GOI)$300,000
- Property Taxes($40,000)
- Insurance Premiums($15,000)
- Property Management Fees($12,000)
- Maintenance and Repairs($18,000)
- Common Area Maintenance($15,000)
- Payroll Expenses($5,000)
- Administrative Expenses($5,000)
- Replacement Reserves($10,000)
- Net Operating Income (NOI)$180,000
Market Cap Rate
Average cap rate for comparable properties in this market, expressed as a decimal: 0.072.
Apply the Formula
Capitalized Value = $180,000 ÷ 0.072 = $2,500,000
The capitalized value of $2,500,000 represents the estimated market value. This is exactly how smart investors bypass emotional pricing, identify potential buy opportunities where the asking price is below the capitalized value, and scale their portfolios with analytical rigor.
