Cap Rate, NOI & Cash-on-Cash Return
Free cap rate calculator with built-in NOI calculator and cash-on-cash return calculator. DSCR included so you can see if the deal pencils for a lender. Paste straight from your rent roll — commas stay, dollar signs are stripped.
Net Operating Income (NOI)
Paste numbers from your rent roll or pro forma — commas stay, dollar signs are stripped (e.g. $125,000).
NOI = all the income the property collects in a year, minus what it costs to run (taxes, insurance, repairs, management). It does not include the mortgage payment.
Cap Rate
Cap Rate = NOI ÷ purchase price. It's the unleveraged yield — what the property would return in year one if you paid all cash. Higher cap rate = cheaper price relative to income (but often more risk).
Cash-on-Cash Return (financing)
Cash-on-Cash = annual cash flow ÷ cash you actually invested (down payment + closing costs). It tells you the real return on the money out of your pocket once the mortgage is in place.
Cash-on-Cash & DSCR
DSCR (Debt Service Coverage Ratio) = NOI ÷ annual mortgage payments. It shows how comfortably the property's income covers the loan. 1.00× means it just barely covers; 1.20× means 20% cushion. Most commercial lenders want 1.20×–1.25× minimum.
Enter NOI and purchase price to see the quick fix.
- A DSCR target solver: pick the lender's box (1.10× to 1.30×) and it computes your maximum loan and the extra down payment needed to fit
- Full income waterfall from gross rents through vacancy, operating costs and debt service to real cash flow
- Cap rate, cash-on-cash, and DSCR together — the three numbers a commercial underwriter actually reads, side by side
Income waterfall · gross rent to cash flow
Positive bars are money in, negative bars are money out. Cash flow at the bottom is what actually hits your account.
Get your real commercial financing quote
Calculators give estimates. We give exact debt-service numbers — DSCR-tested against the lenders most likely to fund this asset class. Free, no obligation, same-day reply.
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How the cap rate calculator works
Cap Rate = NOI ÷ Purchase Price. It's the unlevered yield — the return you'd earn buying the property all-cash. A 6% cap rate means $60,000 of NOI per $1,000,000 of price. Use it to compare deals across markets and asset classes.
NOI calculator
NOI = (Gross Rent + Other Income) × (1 − Vacancy) − Operating Expenses. Operating expenses include property tax, insurance, management, repairs, utilities and reserves. NOI excludes mortgage payments, depreciation and income tax — that's the whole point. Two deals with different financing should be compared at the NOI line.
Cash-on-cash return calculator
Cash-on-Cash = Annual Cash Flow ÷ Cash Invested. Cash flow is NOI minus annual debt service; cash invested is down payment plus closing costs. This is the levered yield on the dollars you actually put in — most syndicators target 8%+ on stabilized deals and 12%+ on value-add.
DSCR for lender pre-screening
DSCR = NOI ÷ Annual Debt Service. Most Canadian commercial lenders underwrite to DSCR ≥ 1.20×, insurance-company lenders to 1.25–1.35×, and some owner-occupied programs accept 1.10–1.15×. If your DSCR is below the threshold, the lender requires a bigger down payment until it clears. (Debt service here uses monthly compounding, the common commercial quoting convention.)
Also see: EBITDA & valuation → · Commercial land transfer tax → · Financing fees →
Cap rate questions, answered
What is a cap rate?+
Capitalization rate (cap rate) measures the unlevered return on a commercial property. Formula: Cap Rate = Net Operating Income (NOI) ÷ Purchase Price. A higher cap rate means more income per dollar of price — but usually more risk or a weaker market.
How is NOI calculated?+
NOI = (Gross Rental Income + Other Income) × (1 − Vacancy %) − Operating Expenses. Operating expenses include property tax, insurance, management, repairs, utilities and reserves — but NOT mortgage payments, depreciation or income tax.
What is a good cap rate?+
Stabilized multifamily in primary markets trades at 4.5–6%, suburban office and retail at 6–8%, and industrial at 5–7%. Cap rates above 9% usually signal tenant risk, deferred maintenance or a secondary market — verify the rent roll.
What is cash-on-cash return?+
Cash-on-Cash Return = Annual Cash Flow ÷ Total Cash Invested. It measures the levered yield on the dollars you actually put in — down payment plus closing costs. 8%+ is healthy for stabilized commercial deals.
What is DSCR?+
Debt Service Coverage Ratio = NOI ÷ Annual Debt Service. Most commercial lenders want DSCR ≥ 1.20× — meaning the property's income covers 120% of the mortgage payment. Below 1.0× the deal loses money before tax.