Printable cheat sheet

Texas cap rate, NOI, and GRM cheat sheet

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

Reviewed August 30, 2026 · Pearson VUE outline #094401 · Current GSE definitions

Use the calculator

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

Start with annual rental income or other operating income.
Subtract vacancy and collection loss if the stem gives it.
Subtract operating expenses such as repairs, insurance, management, property taxes, and owner-paid utilities.
Keep mortgage payments, down payment, debt service, depreciation, and owner income taxes outside NOI.
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.

Annual GIM$1,000,000 value and $125,000 annual gross rent

$1,000,000 / $125,000 = 8.0 GIM. Annual income produces GIM, not monthly GRM.

Traps to check

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

Work it without the answer showing

Label the income period and fence NOI before selecting a formula. Show the decimal conversion for every capitalization rate.

Problem 1 · build NOI and cap rate$144,000 annual potential rent, 6% vacancy and collection loss, $38,000 operating expenses, and $1,200,000 value. Find EGI, NOI, and cap rate.

Income level
Formula
Substitution
Answer

Problem 2 · direct capitalization$84,000 annual NOI and a 7% market cap rate. Find the indicated value.

Income level
Formula
Substitution
Answer

Problem 3 · monthly GRM$360,000 comparable sale price and $3,000 gross monthly rent. Find GRM, then state why annualizing the rent changes the label.

Income level
Formula
Substitution
Answer

Answer key

Vacancy and collection loss is $144,000 x 0.06 = $8,640. EGI is $135,360. NOI is $135,360 - $38,000 = $97,360. Cap rate is $97,360 / $1,200,000 = 8.1133%, rounded to four decimal places.
$84,000 / 0.07 = $1,200,000 indicated value by direct capitalization.
$360,000 / $3,000 = 120 GRM. Annual rent would be $36,000 and $360,000 / $36,000 = 10 GIM, which is a different period and scale.

Sanity check

For the same NOI, a higher cap rate means a lower indicated value.
For the same NOI, a lower cap rate means a higher indicated value.
If your answer moves the opposite way, you probably flipped the formula.
Cap rate times value should approximately recreate NOI.