Analyze commercial real estate investments. Calculate cap rate, NOI, cash flow, DSCR, and cash-on-cash return.
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 Rate = NOI / Purchase Price × 100
NOI = Effective Gross Income − Operating Expenses
Cash-on-Cash = Annual Cash Flow / Down Payment × 100
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.
Calculations are for educational purposes only. Consult a qualified financial advisor for personalized advice.