Commercial real estate · Free calculator

Commercial Property ROI Calculator

Underwrite office, retail, industrial, or multifamily commercial real estate: NOI, cap rate, DSCR, cash-on-cash, and 5-year exit value.

Disclaimer: Educational estimate only — not investment, tax, or legal advice. Commercial deals turn on lease structure (NNN vs gross), tenant credit, capex reserves, and exit cap. Always confirm underwriting with a commercial broker, lender, and CPA before committing capital.

Country context

Tailor estimates to 🇺🇸 United States

All math runs in USD. We overlay United States-specific tax and cost assumptions + show local-currency equivalents at an approximate FX rate.

Transfer tax / stamp duty
1.00%
One-time on purchase
Annual property tax
1.10%
of assessed value
Rental income tax
22.0%
indicative effective
Typical mortgage rate
7.00%
Gross yield: 5–9%
Estimated United States taxes & fees on your inputs
One-time transfer tax / stamp duty$22,000
Annual recurring property tax$24,200
Capital gains on +20% appreciation (illustrative)$66,000

🇺🇸 United States note: Property tax varies massively by state (0.3% Hawaii → 2.2% NJ). 1031 exchange can defer capital gains on investment property. Tax rates are national midpoints — they vary by region, residency, and property type. FX shown at an approximate USD reference rate (updated periodically). This is an educational tool, not legal, tax, or investment advice.

Scenarios
Common scenarios

Tap a persona to auto-load realistic numbers for that scenario, then tweak the sliders.

$2,200,000
30%
7.5%
25
$240,000
7%
38%

Taxes, insurance, mgmt, R&M, reserves. Lower for NNN leases.

7%
Formula used

Commercial NOI underwriting

Commercial value is driven entirely by NOI and the cap rate the next buyer applies. Cap-rate compression (or expansion) at exit can dwarf operating returns.

NOI = EGI − OpEx · Cap = NOI / Price · Exit Value = Year-5 NOI / Exit Cap
Lender DSCR
≥ 1.25
Equity multiple target
1.8–2.5x / 5yr
Killer
Exit cap drift
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Lease structure changes everything

Gross leases (tenant pays rent, landlord pays taxes/insurance/maintenance) require ~35–45% opex assumptions. Absolute NNN leases (tenant pays all) can run 3–7% opex. The same building, same rent, has wildly different NOI depending on which lease type sits in place.

  • NNN: tenant pays taxes, insurance, CAM. Landlord opex is minimal.
  • Modified gross: landlord pays some operating costs, tenant reimburses excess.
  • Full-service gross: landlord pays everything. Common in older office.

Exit cap rate is the silent variable

A 50 bps cap-rate expansion on a stabilized commercial asset can erase 10–20% of value. Always stress-test exit cap +50 bps and +100 bps from your going-in assumption — if the deal only works at a compressed exit, it's a speculation, not an investment.

Tenant credit + WALT matter as much as cap rate

A 7% cap on a 10-year lease with an investment-grade tenant is a fundamentally different asset than a 7% cap on a month-to-month mom-and-pop. Weighted Average Lease Term (WALT), tenant credit, and lease renewal probability are baked into a real underwriting model — they don't show up in a back-of-envelope cap rate.

FAQ

What's a good cap rate for commercial property?

Class A urban industrial trades 5–6%, Class B multifamily 5.5–7%, suburban office 7–9%, single-tenant NNN retail 5.5–7% depending on tenant credit. Cap rates move with interest rates — what was a 'good' cap in 2021 is a different number in 2026.

What's the difference between cap rate and cash-on-cash?

Cap rate is unleveraged — NOI / price. Cash-on-cash is leveraged — annual cashflow after debt / cash invested. Always quote both.

Why does the calculator use a 5-year exit?

Most commercial deals are underwritten on a 5–10 year hold. Year-5 exit is the standard institutional baseline and matches typical bridge or 5-year fixed loan terms.

Does it model rent growth?

This is a year-1 stabilized model — it does NOT compound rent growth into the exit NOI. For a full pro forma with year-by-year rent escalators, build it out in Excel with this as your year-1 baseline.

Can I use this for syndications?

It's a good sponsor-side underwriting check. For LP-facing returns, layer on acquisition fees, asset management fees, the waterfall split, and refinance assumptions.