Commercial NOI to Cap Rate Value

Check how much a commercial asset is worth by pairing stabilized NOI with the prevailing cap rate. Enter annual NOI and the market cap rate to see the implied property value, then optionally subtract a vacancy reserve or add closing-cost uplift to understand the all-in basis investors will underwrite.

Trailing or pro forma NOI before debt service.
Target cap rate for comparable sales in percent.
Optional. Defaults to 0% if blank to mirror fully leased income.
Optional. Defaults to 1.75% to reflect transfer taxes, legal fees, and inspections.

Indicative valuation only—confirm underwriting assumptions, market comps, and rent rolls before making investment decisions.

Examples

  • $1.25M NOI at a 5.85% market cap with a 2% reserve and 2% closing costs ⇒ Implied property value: $20,248,201.44 USD • Effective NOI after reserve: $1,225,000.00 USD/year • All-in basis including closing costs: $20,653,165.47 USD • Price per $1 of stabilized NOI: 16.53×.
  • $820k NOI at a 6.75% cap, no reserve, 1.5% costs ⇒ Implied property value: $12,148,148.15 USD • Effective NOI after reserve: $820,000.00 USD/year • All-in basis including closing costs: $12,330,370.37 USD • Price per $1 of stabilized NOI: 14.81×.

FAQ

What cap rate should I enter?

Use the going-in cap rate from comparable stabilized sales in the same market and asset class. If you are underwriting a forward sale, use the exit cap assumptions instead to see target value at disposition.

Does the calculator handle negative NOI?

No—the tool expects positive stabilized NOI. For value-add deals that are temporarily negative, model pro forma NOI after renovations before using this calculator.

How should I treat capital reserves or reimbursements?

Include recurring capital reserves in NOI before you plug in the value. One-time reimbursements should be removed so the cap rate only capitalizes durable income streams.

Can I benchmark against debt yields?

Yes. Once you have the implied basis, divide the same NOI by your prospective loan amount to see if the lender's minimum debt yield is satisfied.

Additional Information

  • Vacancy reserves reduce NOI before capitalizing so you avoid overvaluing assets that still have lease-up risk.
  • Closing and capital costs usually range 1–3% for legal, inspections, and upfront capex; include a higher uplift for heavy value-add projects.
  • The price-per-dollar-of-NOI multiple (e.g., 16.5×) helps you compare with broker whisper guidance or past comps.
  • Pair the implied basis with your leverage model to back into equity checks and minimum debt yield thresholds.

Related calculators