Commercial Property Cap Rate Calculator

What is this building worth, and will the loan cover it?

Enter the income and expenses. You get net operating income, the value at a market cap rate, and, if you enter a price, the debt service coverage ratio, cash-on-cash return, the occupancy you need to break even and the loan a lender is likely to give.

The numbers on the page are an example, not market data. Replace every one with the property's trailing-12 statement and a local cap rate. Not an appraisal and not financial advice.

Gross potential rent per year ($)

Other income per year ($)

Vacancy and credit loss (%)

Property tax per year ($)

Insurance per year ($)

Owner-paid utilities per year ($)

Repairs and maintenance per year ($)

Management fee (% of collected income)

Replacement reserves per year ($)

Other operating expenses per year ($)

Market cap rate (%)

Asking or purchase price ($, 0 to skip financing)

Loan-to-value (%)

Loan interest rate (%)

Amortization (years)

Fill in the answers, then click Calculate.

Result

Item	Per year

Value by cap rate and vacancy

What it does, and what it leaves to you

Covers: effective gross income, operating expenses and NOI, the income-approach value at your cap rate, the going-in cap rate at a price, loan payment, DSCR, cash-on-cash return, break-even occupancy, the loan size at a 1.25x coverage test, and how value moves with cap rate and vacancy.
Gives: a single year-one snapshot you can print or save as text for a partner, lender or broker conversation.
Not decided: income tax and depreciation, capital expenditures beyond reserves, lease rollover and tenant improvements, rent growth, loan fees and prepayment cost, and what a lender or appraiser will actually accept. Your lender, broker or appraiser decides these.

Common questions

What is a cap rate and how do I use it?

The capitalization rate is a property's net operating income divided by its value. Dividing NOI by a market cap rate gives an income-approach value: $145,740 of NOI at a 7% cap rate is about $2.08 million. A lower cap rate means a higher price for the same income.

What counts in net operating income?

Rent and other income after vacancy, minus operating costs: property tax, insurance, utilities, repairs, management and replacement reserves. It excludes mortgage payments, depreciation and income tax, which is why the same NOI can serve cash and financed buyers.

What debt service coverage ratio do lenders want?

Many commercial lenders want NOI at least 1.20 to 1.25 times the annual loan payment, and they set the loan size by that test as well as by loan-to-value. If your DSCR is lower, the loan shrinks and you need more equity.

Is my data uploaded anywhere?

No. Everything is calculated in your browser and nothing is sent.