Cap Rate Calculator (VND)
The capitalization rate — "cap rate" — is the single number property investors use to compare rental deals on a like-for-like basis. It answers one question: what annual return does this property throw off relative to its price, before any mortgage? The formula is cap rate = NOI / value, where NOI (net operating income) is the rent you actually collect after vacancy and operating costs, not the headline number on the listing.
For an expat buying or renting out a unit in Vietnam, the gap between gross yield and cap rate is where the money quietly disappears. Take a 4.000.000.000 VND apartment let at 25.000.000 VND a month: annual rent is 300.000.000 VND, a tempting 7.50% gross yield. But strip out 10% vacancy (30.000.000 VND lost to empty months) and 1.8% of value in running costs (72.000.000 VND for management fees, repairs, insurance and property taxes), and NOI lands at 198.000.000 VND — a cap rate of just 4.95%. That spread is the difference between the brochure and the bank statement.
The calculator above takes the property value, monthly rent, vacancy rate and operating cost rate, then returns NOI, cap rate, gross yield and net yield instantly. One caveat runs through every example: the figures are illustrative assumptions, not quotes for any real unit. Rent, vacancy and costs in Vietnam vary enormously by district, building and season — plug in your own numbers before you commit.
How the calculator works out a cap rate
From rent to NOI in four steps
The tool follows the same sequence a professional underwriter uses to peel a property's cash flow apart:
- Gross annual rent = monthly rent × 12 = 25.000.000 × 12 = 300.000.000 VND.
- Subtract vacancy: multiply by (1 − vacancy rate). At 10% you lose 30.000.000 VND, leaving effective rent of 270.000.000 VND.
- Subtract operating costs: value × 1.8% = 72.000.000 VND (management, repairs, insurance, property tax).
- NOI = effective rent − operating costs = 270.000.000 − 72.000.000 = 198.000.000 VND.
| Symbol | Meaning |
|---|---|
| Cap rate | NOI / value = 198.000.000 ÷ 4.000.000.000 = 4.95% |
| NOI | Net operating income per year (198.000.000 VND) |
| Gross yield | Gross rent / value = 300.000.000 ÷ 4.000.000.000 = 7.50% |
| Net yield | The same as NOI / value here, equal to the cap rate (4.95%) |
Gross yield vs net yield vs cap rate
Gross yield divides rent by price and ignores every cost, so it always flatters a deal. Cap rate (which equals net yield here) deducts both vacancy and operating costs, so it reflects the cash a property really produces. For simplicity the model expresses operating costs as 1.8% of value per year; in practice you should itemise the actual line items — building management fees, maintenance, insurance, tax — for a tighter estimate.
Why cap rate moves inversely to price
Because cap rate = NOI / price, the more you pay, the lower the cap rate, even with identical rent. Holding NOI at 198.000.000 VND, paying less lifts the cap rate and overpaying crushes it — which is why investors say "you make your money when you buy". Negotiating the price matters as much as raising the rent.
What the model leaves out
Cap rate deliberately ignores mortgage financing — that is the job of the cash-on-cash return — as well as expected capital appreciation, and it assumes rent, vacancy and costs stay constant. It also excludes Vietnamese personal income tax on rental income. Treat cap rate as a fast comparison metric across properties, not a full picture of profit.
Worked example: a 4.000.000.000 VND apartment let at 25.000.000 VND/month
Illustrative assumptions: 10% vacancy per year, operating costs of 1.8% of value per year, no mortgage and no tax.
| Line item | Amount per year |
|---|---|
| Gross rent (25.000.000 × 12) | 300.000.000 |
| Less vacancy (10%) | −30.000.000 |
| Effective rent collected | 270.000.000 |
| Less operating costs (1.8%) | −72.000.000 |
| NOI (net operating income) | 198.000.000 |
Reading the table:
- Cap rate = 198.000.000 ÷ 4.000.000.000 = 4.95%. That is the property's true unlevered, pre-tax return if you buy it for cash.
- Gross yield looks like 7.50% (300.000.000 ÷ 4.000.000.000). The gap to the cap rate is the cost of empty months and running expenses — exactly what buyers tend to forget.
- Against a bank deposit, a 4.95% cap rate may not beat a long-term VND term deposit, so a lot of buy-to-let investors are really betting on price appreciation rather than rental cash flow.
For the base case shown in the tool (a 2.500.000.000 VND unit at 15.000.000 VND/month, 8% vacancy, 1.5% costs), NOI is 128.100.000 VND and the cap rate is 5.12%. To layer a mortgage on top and see your cash-on-cash return, pair this with FiMo's rental property and rent-vs-buy calculators.
Frequently asked questions
What is a cap rate?
Cap rate = NOI / property value — the annual net operating income as a percentage of the price you pay, before any mortgage. NOI is the rent you actually collect after deducting vacancy and operating costs. Illustrative example: a 4.000.000.000 VND apartment with NOI of 198.000.000 VND has a cap rate of 4.95%. It is the standard yardstick for comparing rental properties on a like-for-like basis.
How is cap rate different from gross yield?
Gross yield is annual rent divided by price and ignores all costs, so it always looks better than reality. Cap rate subtracts both vacancy and operating costs, so it reflects the true cash flow. In the example, gross yield is 7.50% (300.000.000 ÷ 4.000.000.000) but the cap rate is only 4.95% after stripping out 30.000.000 VND of vacancy and 72.000.000 VND of costs. That gap is the trap in every glossy listing.
What is a good cap rate for rental property in Vietnam?
There is no universal "right" number — a sensible cap rate depends on location, risk and your appreciation expectations. Prime, low-risk units carry lower cap rates (buyers accept thin rental yields in exchange for price growth); riskier suburban units need higher cap rates to compensate. A practical benchmark is to compare your cap rate against a long-term VND term-deposit rate: if a 4.95% cap rate sits below the bank rate, you are mostly betting on capital appreciation rather than rental income.
How is NOI (net operating income) calculated?
NOI = effective rent − operating costs. Effective rent = gross rent × (1 − vacancy rate); operating costs here are expressed as a percentage of property value. Example: gross rent 300.000.000 VND, less 10% vacancy leaves 270.000.000 VND, less 72.000.000 VND of costs gives NOI of 198.000.000 VND. NOI does not subtract mortgage principal or interest — that belongs to the cash-on-cash return, not the cap rate.
What is the difference between cap rate and cash-on-cash return?
Cap rate assumes an all-cash purchase: NOI / total value, measuring the property itself. Cash-on-cash is calculated on the actual cash you put in after borrowing: (NOI − debt service) / your equity. When you borrow below the cap rate, leverage pushes cash-on-cash above the cap rate; borrow above it and leverage erodes your return. This tool gives you the cap rate first; to add a mortgage, use FiMo's rental property calculator.
Why does a higher purchase price mean a lower cap rate?
Because cap rate = NOI / price: the numerator (rental cash flow) is fixed while the denominator (price) rises, so the ratio falls. Holding NOI at 128.100.000 VND on the base unit, buying at 2.000.000.000 VND yields 6.40%, but overpaying at 3.000.000.000 VND drops it to 4.27%. This is why "you make your money when you buy" — negotiating the price matters as much as the rent. Adjust the value in the tool to watch the cap rate move.
Is rental income taxed in Vietnam?
Yes. An individual landlord whose rental turnover exceeds the exemption threshold owes VAT and personal income tax, charged as a fixed percentage of rental revenue under the rules for individual/household businesses. This calculator reports a pre-tax cap rate so properties compare cleanly, so your real take-home return will sit a little below the 4.95% headline. Thresholds and rates can change — check the current rules or your tax office before relying on an exact figure.