Stabilized Cap Rate Calculator

Buyers acquiring value-add or transitional assets need a cap rate that reflects post-lease-up performance, not the in-place T-12. This calculator builds stabilized NOI from gross potential rent, vacancy assumption, market opex ratio, and capex reserves — and divides by acquisition cost to deliver a forward-looking yield. The metric is critical for distinguishing a true bargain from a low-yield acquisition that priced in execution risk.

Stabilized gross revenue

Stabilized vacancy %

Operating expense ratio %

Of EGI

Capex reserve / unit / yr

Units

Acquisition price

Stabilized NOI

$289,400

Stabilized cap rate

5.26%

Effective gross income

$456,000

Operating expenses

$159,600

Capex reserves

$7,000

How the math works

Stabilized cap rate uses the projected post-lease-up NOI rather than current trailing income. This gives a forward view of the going-in yield once the asset is performing at market — useful for value-add and lease-up acquisitions.

A trailing 5% cap might be a stabilized 7.5% cap if the property is 25% vacant at acquisition. Buyers underwriting on stabilized cap rate must execute the lease-up plan to realize that yield.

How to Use

Enter projected stabilized gross revenue, vacancy, and opex ratio.
Add per-unit capex reserves and unit count.
Enter acquisition price.
Read stabilized NOI and the resulting going-in stabilized cap rate.

Frequently Asked Questions

Should I add reserves to opex?

Most institutional underwriters separate reserves from opex but deduct them from NOI for cap rate purposes. Brokers sometimes exclude reserves to inflate cap.

How does this differ from in-place cap?

In-place cap divides current trailing NOI by price; stabilized cap divides projected post-lease-up NOI. Spread between the two = value-creation upside.