In this guide
- What a cap rate is, in plain terms
- Current assisted living cap-rate ranges
- How the cap rate sets your facility's value
- What pushes a cap rate higher or lower
- How it connects to your sale price
Key takeaways
- A cap rate is NOI ÷ price; rearranged, value = NOI ÷ cap rate.
- Institutional assisted living has recently run about 6.75%–7% (Newmark); small residential care homes are typically higher (8%–10%+).
- A lower cap rate means a higher price for the same income — and 2026 surveys expect cap rates flat to slightly lower.
- Your cap rate is driven by size, occupancy, operations quality, and market — improve those and you compress the rate.
What is a cap rate for an assisted living facility?
A cap rate is a facility's net operating income (NOI) divided by its price, expressed as a percentage. Rearranged, it's the multiplier that converts income into value: divide your NOI by the market cap rate and you get an estimated value. A home earning $300,000 in NOI at a 7% cap rate is worth about $4.3 million.
The cap rate reflects how much risk and growth buyers price into the income. A lower cap rate means buyers will pay more per dollar of income (they see it as safer or growing); a higher cap rate means they pay less. For the full valuation method this feeds into, see how assisted living facilities are valued.
What are current assisted living cap rates?
Recent institutional assisted living cap rates have run roughly 6.75%–7%. Newmark's valuation and advisory work put Class A assisted-living-with-memory-care around 6.75% and Class B around 7%, with independent and assisted living overall "in the 5.75% to 7% range." Heading into 2026, Senior Housing News investor surveys expect cap rates to stay flat or move slightly lower.
| Property type | Approx. going-in cap rate |
|---|---|
| Independent living, Class A | ~5.75% |
| Independent living, Class B | ~6.0% |
| Assisted living + memory care, Class A | ~6.75% |
| Assisted living + memory care, Class B | ~7.0% |
| Small residential care homes (RAL) | ~8%–10%+ (higher risk) |
Those institutional figures apply to larger, professionally operated communities. Small residential assisted living homes trade at higher cap rates because they're smaller, more owner-dependent, and carry more operational risk. Figures: Newmark valuation & advisory report (reported early 2025); direction from Senior Housing News 2026 investor surveys — verify current rates for your market before relying on them.
How does the cap rate affect your facility's value?
Because value equals NOI divided by the cap rate, a small change in the rate moves the price a lot. The same $300,000 of NOI is worth very different amounts depending on the cap rate a buyer applies:
| NOI | Cap rate | Approx. value |
|---|---|---|
| $300,000 | 6.75% | ≈ $4.44 million |
| $300,000 | 7.0% | ≈ $4.29 million |
| $300,000 | 9.0% | ≈ $3.33 million |
That spread — over a million dollars on the same income — is why the quality and story of your operation matter as much as the raw numbers.
What makes a cap rate higher or lower?
Lower (better) cap rates go to facilities that look safer and more scalable. The biggest factors are size (larger communities compress the rate), occupancy and its stability, the strength and independence of the operations, the physical plant, and local demand and supply. A small, owner-run home with lumpy occupancy will be priced at a higher cap rate than a stabilized, professionally managed community.
The practical takeaway: you can influence your own cap rate. Raising occupancy, professionalizing operations, and reducing owner dependence all push your rate down and your value up — the same levers covered in how to increase your facility's value before selling.
How do cap rates connect to what you'll sell for?
Your sale price is essentially your normalized NOI divided by the cap rate a buyer assigns. So there are two ways to raise it: grow durable NOI, or earn a lower cap rate through a stronger, de-risked operation. When you're ready to translate that into an actual number and a buyer, connect with a Buy Sell Assisted Living expert.
Informational only — not financial, legal, tax, or investment advice. Cap rates vary by market and change over time; verify current figures with qualified professionals before acting.