Analyze commercial real estate investments. Calculate cap rate, NOI, cash flow, DSCR, and cash-on-cash return.
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The Chen family is buying a $340,000 home in Columbus, Ohio. Combined income $115,000, 10% down payment, 30-year fixed at 7.125%.
Takeaway: Columbus/Franklin County averages are the reference baseline. Property tax rates and insurance premiums shift significantly by ZIP code and HOA status. Plug your actual numbers in above.
We default to state-average millage rates. County and municipal rates vary 40%+ within a single state. Ohio ranges from 0.8% (rural counties) to 2.4% (Cuyahoga/Cleveland area). Always cross-check your specific county assessor's published effective rate.
Property Tax by StateHomeowner association fees add $100-$800/month in condos and planned communities. Condos in urban markets often run $400-$700/month. If your property has HOA, add it manually to any payment estimate — it directly affects your debt-to-income ratio for loan qualification.
HOA Fee CalculatorClosing costs typically run 2-5% of the loan amount — around $6,000-$15,000 on a $300K home. Lender fees, title insurance, escrow, and prepaid taxes add up fast. These are due at closing in cash, not rolled into the mortgage by default.
Closing Costs CalculatorPrivate mortgage insurance (PMI) costs 0.5-1.5% of the loan annually until you reach 20% equity. On a $300K loan at 1%, that's $250/month. PMI cancels automatically at 78% LTV under federal law — but you can request removal at 80%.
National home price appreciation has averaged ~4% annually since 1968, but markets diverge dramatically. Sun Belt metros averaged 10%+ during 2020-2022; coastal markets often lag the national average during correction cycles. Local supply constraints are the main driver.
If you've lived in the home 2 of the last 5 years, you can exclude $250K (single) or $500K (married) of gain from federal capital gains tax. Many calculators show gross profit without applying this exclusion. Relevant when projecting sale proceeds.
Home Sale Capital Gains CalculatorBased on your inputs
NOI: $48,440/year
| Down Payment | $300,000 |
|---|---|
| Loan Amount | $700,000 |
| Effective Gross Income | $76,000 |
| Total Operating Expenses | $27,560 |
| Net Operating Income (NOI) | $48,440 |
| Cap Rate | 4.84% |
| Monthly Mortgage | $4,726 |
| Annual Cash Flow | $-8,277 |
| Cash-on-Cash Return | -2.76% |
| Gross Yield | 8.00% |
| DSCR | 0.85 |
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Cap rates vary by asset class: Class A office/retail 4–6%, industrial 5–7%, multifamily 4–6%, and strip retail 6–9%. Higher cap rates mean more income relative to price but often more risk.
NOI is income before debt service (mortgage). Cash flow is NOI minus mortgage payments. NOI is used to value the property; cash flow shows your actual return after financing.
Commercial property is primarily valued using the income approach: Value = NOI / Cap Rate. A property with $100,000 NOI at a 5% cap rate is worth $2,000,000.
Property tax, insurance, management fees (4–8%), maintenance, utilities (if not NNN), reserves, and common area maintenance. NNN leases shift most expenses to tenants.
A triple net (NNN) lease requires the tenant to pay property taxes, insurance, and maintenance in addition to rent. This shifts most operating expenses to the tenant. NNN properties are popular with passive investors because the landlord collects net rent.
Commercial property typically requires 20-35% down payment. SBA 504 loans allow 10-15% down for owner-occupied properties. Conventional commercial loans require 25-30%. Higher down payments often get better interest rates and loan terms.
The 1% rule states that monthly rent should be at least 1% of the purchase price. A $500,000 property should rent for $5,000 or more per month. This is a quick screening tool, not a replacement for full financial analysis.
Commercial leases typically run 3-10 years with renewal options. Retail leases average 5-10 years. Office leases run 3-7 years. Industrial leases average 5-15 years. Longer leases provide income stability and reduce turnover costs.
Operating expense ratios vary by property type: office buildings 35-50%, retail 25-40%, industrial 15-25%, and multifamily 35-50%. NNN properties have near-zero expense ratios for the landlord. Lower ratios mean more NOI from each rent dollar.
A tenant improvement (TI) allowance is money the landlord provides for the tenant to customize their space, typically $20-$80 per square foot for office space. TI allowances attract quality tenants and are amortized into the lease rate over the term.
Cap Rate = NOI / Purchase Price × 100
NOI = Effective Gross Income − Operating Expenses
Cash-on-Cash = Annual Cash Flow / Down Payment × 100
Every formula on this page traces to a federal agency, central bank, or peer-reviewed institution. We cite the rule-makers, not secondhand blogs.
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Calculations are for educational purposes only. Consult a qualified financial advisor for personalized advice.