Commercial Real Estate · Underwriting v3.7

Cap Rate & Net Operating Income (NOI) Calculator

Perform institutional-grade property yield analysis, unlevered Cap Rate valuation, OpEx ratio modeling, and Debt Service Coverage Ratio (DSCR) underwriting in real time.

Asset Presets:

1. Property & Revenue Profile

Purchase / Target Price

Target Market Cap Rate

Gross Scheduled Rent (GSR / yr)

Other Income (Parking, Laundry / yr)

Vacancy & Credit Loss Rate

2. Operating Expenses (OpEx Stack)

Property Taxes ($/yr)

Property Insurance ($/yr)

Repairs & Maintenance ($/yr)

Management Fee (% of EGI)

Owner-Paid Utilities ($/yr)

Admin, Legal & Grounds ($/yr)

Replacement Reserves ($/yr)

Underwriting & Yield Results

Calculated Capitalization Rate

6.82%

Unlevered Property Yield

Net Operating Income (NOI)

$286,280

$23,857 / mo

Effective Gross Income (EGI)

$478,800

-$25,200 vacancy

Total Operating Expenses

$192,520

OER: 40.2% of EGI

Valuation @ Target Cap Rate

$4,404,308

+$204,308 (+4.9%)

Commercial Lending & DSCR Underwriting (70% LTV, 6.5% Int, 30y Amort)

Annual Debt Service

$223,019

DSCR (Bank Benchmark ≥ 1.25x)

1.28x

Net Levered Cash Flow

$63,261 / yr

Cash-on-Cash Return

5.02%

Cap Rate Valuation Sensitivity

Cap Rate Shift	Cap Rate	Implied Property Value	Valuation Delta

Commercial Real Estate Underwriting Equations

The Capitalization Rate (Cap Rate) represents the unlevered return an investor would realize if a commercial property were purchased entirely in cash. It allows direct comparison across real estate asset classes regardless of leverage structure.

Gross Potential Income (GPI) = Gross Scheduled Rent + Ancillary Revenue (Storage, Parking, Laundry, RUBS).
Effective Gross Income (EGI) = Gross Potential Income × (1 − Vacancy & Credit Loss Rate).
Operating Expenses (OpEx) = Real Estate Taxes + Insurance + Maintenance + Management Fee + Utilities + Administrative + Replacement Reserves. (Crucial: OpEx strictly excludes mortgage interest and principal amortization).
Net Operating Income (NOI) = Effective Gross Income − Total Operating Expenses.
Cap Rate (%) = (Net Operating Income / Purchase Price) × 100%.
Valuation Back-Solve = Net Operating Income / Market Cap Rate.
Debt Service Coverage Ratio (DSCR) = Net Operating Income / Annual Debt Service.

Frequently Asked Questions

What is a good Cap Rate for commercial real estate in 2026?

Cap rates vary significantly by asset tier and metropolitan submarket: Class A multifamily properties in primary gateway cities typically trade between 4.5% and 5.5%, Class B suburban office/retail trades between 6.0% and 7.5%, while Class C secondary-market value-add assets trade at 8.0% to 10.0%+ (Industry Estimate / 行业经验估算). A higher cap rate indicates higher yield but correlates with greater tenant credit risk or market vacancy.

Why does Net Operating Income (NOI) exclude mortgage debt service?

NOI measures the organic income generated by the real estate asset itself, independent of how any specific buyer finances the deal. Including mortgage payments would cause the same building to reflect completely different performance depending on whether a buyer uses 0% cash or 80% leverage. Financing impact is measured separately via DSCR and Cash-on-Cash return.

What is the difference between Cap Rate and Cash-on-Cash Return?

Cap Rate is the total unlevered property yield based on purchase price ($NOI / Price$). Cash-on-Cash return is the levered annual yield on actual out-of-pocket equity invested ($[NOI - Debt Service] / Initial Cash Invested$). When the property cap rate exceeds the borrowing interest rate (positive leverage), Cash-on-Cash return will exceed the Cap Rate.

How does Cap Rate expansion affect commercial property values?

Because value equals NOI divided by Cap Rate, property valuations move inversely to cap rates. If an asset produces $300,000 in NOI and market cap rates expand by 100 basis points from 6.0% to 7.0%, the property value drops from $5,000,000 to $4,285,714—a loss of over $714,000 (14.3%) with zero decline in rental income.

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Frequently Asked Questions

Is Commercial Real Estate Cap Rate Calculator free to use?

Yes, Commercial Real Estate Cap Rate Calculator is completely free with no signup or registration required. All processing happens directly in your browser.

Is my data safe?

Absolutely. Your data never leaves your device. Everything runs locally in your browser — no uploads, no servers, no tracking.

Do I need to install anything?

No installation needed. Commercial Real Estate Cap Rate Calculator works entirely in your web browser on both desktop and mobile devices.

How do I use

Simply enter or paste your input in the tool above, and the result will be generated instantly. No configuration required.