This page describes the data sources, assumptions, and limitations behind CapRateCity calculators, market data, rankings, and city pages. Read it before relying on any number on this site for a real decision.
Data Sources
Home Prices — Zillow Home Value Index (ZHVI)
We use the Zillow Home Value Index (ZHVI), a smoothed, seasonally adjusted measure of typical home values, at the metropolitan statistical area (MSA) level. ZHVI is published monthly by Zillow Research and is widely used by economists and institutional investors. We use the SFR + Condo + Multifamily middle-tier (33%–67% percentile) series.
Rents — Zillow Observed Rent Index (ZORI)
We use the Zillow Observed Rent Index (ZORI) at the MSA level. ZORI tracks observed listed rents on the Zillow platform and is published monthly. We use the all-homes, smoothed series.
Property Taxes
Effective property tax rates come from county and state assessor data. We use effective rates, which reflect actual tax burdens on owner-occupied or investment property after common exemptions, rather than statutory headline rates.
Population, Income, Vacancy
Population, household income, and demographic data come from U.S. Census Bureau estimates (primarily the American Community Survey). Vacancy rates come from the Census Housing Vacancy Survey and HUD estimates where applicable.
How We Calculate Cap Rate
Cap rate is computed as net operating income (NOI) divided by purchase price (or current market value). NOI is gross rental income, less vacancy and operating expenses, before debt service.
Our default NOI build:
- Gross annual rent = median monthly rent × 12
- Less vacancy = gross rent × city-specific vacancy rate
- Less property taxes = price × effective tax rate
- Less insurance ≈ 0.4% of property value (assumption)
- Less maintenance ≈ 0.8%–1.0% of property value (assumption)
- = NOI
- Cap rate = NOI / price × 100
Cap rate excludes mortgage payments by design. Cash-on-cash return and DSCR calculations do include financing assumptions, and those assumptions are visible in the relevant calculator interfaces (rate, down payment, term).
Default Assumptions
Calculator defaults are intended to be reasonable starting points, not optimized outputs. Common defaults you may see:
- 20% down payment on conventional financing
- 30-year amortization
- Interest rate set to a recent prevailing investor rate (often around 7%)
- Vacancy: city-specific rate from Census data
- Insurance: ~0.4% of property value annually
- Maintenance / repairs: ~0.8%–1.0% of property value annually
- Property management: 8%–10% of gross rent
These are starting points only. Real property economics depend on the specific building, neighborhood, age, condition, financing, and tenant base.
Update Cadence
- Zillow ZHVI / ZORI: updated when Zillow publishes a new release (typically monthly).
- Census data: updated annually when ACS releases.
- Effective tax rates: updated periodically as assessor data refreshes.
- Articles and guides: revisited when material market or regulatory changes occur.
Limitations You Should Know
- Metro-level data, not property-level. Our numbers describe the median or typical property in a metro. Individual neighborhoods and properties can vary materially.
- Smoothed, not real-time. ZHVI / ZORI are smoothed indexes. They reflect recent trend, not the latest transaction price on the corner.
- Default expense ratios may not match your property. Older homes, vacation rentals, multifamily, and properties in high-insurance regions can run much higher operating costs.
- Financing assumptions change. Rates and lender requirements move; always quote your own deal with current lenders.
- Historical data is not predictive. Past appreciation, rent growth, and vacancy rates do not guarantee future results.
- Property-specific factors are absent. Condition, deferred maintenance, capital expenditures, HOA, special assessments, and rent control are not modeled in baseline calculations.
How to Use Our Data Responsibly
- Treat our numbers as a starting point for screening, not as a final underwriting.
- Verify rents using local listings, property managers, and recent leases before buying.
- Get an actual insurance quote on your target property — premiums vary widely.
- Confirm taxes after sale; many jurisdictions reassess on transfer.
- Have a licensed professional review any contract, financing, or tax structure.
See also our disclaimer, editorial policy, and corrections policy.
Contact
Methodology questions or suggestions: jake@capratecity.com.