Printable cheat sheet

    Florida cap rate, NOI, and GRM cheat sheet

    Built for Florida sales associate exam prep. Fence the NOI, pick the formula direction, and ignore financing distractors before you calculate.

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    Cap rateNOI / Value

    Use annual net operating income and the property value or sale price stated in the question.

    ValueNOI / Cap rate

    Convert the cap rate to a decimal first. Use 8% as 0.08, not 8.

    NOIValue x Cap rate

    Use this when the question gives value and cap rate but asks for annual net operating income.

    GRMValue / Gross rent

    GRM uses gross rent, not NOI. Keep it separate from cap rate.

    Inside NOIIncome - vacancy - operating expenses

    Rental income, vacancy, repairs, insurance, property taxes, management, and owner-paid utilities belong here.

    Outside NOIFinancing stays out

    Mortgage payment, down payment, debt service, depreciation, and owner income taxes stay outside cap-rate NOI.

    The NOI Fence

    1. Start with annual rental income or other operating income.
    2. Subtract vacancy and collection loss if the stem gives it.
    3. Subtract operating expenses such as repairs, insurance, management, property taxes, and owner-paid utilities.
    4. Keep mortgage payments, down payment, debt service, depreciation, and owner income taxes outside NOI.
    5. Use the value, sale price, or current appraised value stated in the question.

    Five worked examples

    Multi-step vacancy$96,000 rent, $6,000 vacancy loss, $32,000 operating expenses, $800,000 value

    $96,000 - $6,000 - $32,000 = $58,000 NOI. $58,000 / $800,000 = 0.0725 = 7.25%.

    Find value$72,000 NOI at an 8% cap rate

    $72,000 / 0.08 = $900,000.

    Mortgage distractor$60,000 NOI, $750,000 value, $4,000 monthly mortgage payment

    Ignore the mortgage payment. $60,000 / $750,000 = 0.08 = 8%.

    Find NOI$650,000 value at a 7% cap rate

    $650,000 x 0.07 = $45,500 NOI.

    GRM$1,000,000 value and $125,000 annual gross rent

    $1,000,000 / $125,000 = 8.0 GRM. Use gross rent, not NOI.

    Traps to check

    1. Do not use gross income in the cap rate formula.
    2. Do not subtract mortgage payments when finding NOI.
    3. Do not use 8 instead of 0.08 for an 8% cap rate.
    4. Do not use loan amount or down payment as the property value.
    5. Do not mix GRM and cap rate. GRM uses gross rent. Cap rate uses NOI.

    Sanity check

    1. For the same NOI, a higher cap rate means a lower indicated value.
    2. For the same NOI, a lower cap rate means a higher indicated value.
    3. If your answer moves the opposite way, you probably flipped the formula.
    4. Cap rate times value should approximately recreate NOI.
    Practice the patternPass Florida drills cap rate, GRM, and mixed real estate math.

    Use the calculator, Math Coach, Trap Library, and 1,002 Florida-specific questions at passfloridarealestate.com.

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    Sources: DBPR Real Estate Sales Associate Candidate Information Booklet, Pearson VUE real estate content outline, and Pass Florida math framework. For exam prep only, not investment, appraisal, tax, or legal advice.

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