Commercial Real Estate Investment Calculator & Deal Analyzer
Evaluate commercial property ROI, debt coverage, and cash flow yields from a single set of assumptions.
Deal Analyzer: Comprehensive CRE Underwriting
One input set for Cap Rate, NOI, Cash-on-Cash, DSCR, and Break-Even Ratio.
1. Property & Acquisition Info
2. Annual Income & Expenses
100% full-occupancy annual rent + other income before vacancy or expenses.
Uncollected rent from empty units or default: -$16,800/yr.
Property tax, insurance, repairs, management (excludes loan payments).
EGI: GPI × (1 − Vacancy %), actual collected annual revenue after vacancy and credit loss.
NOI: EGI − Operating Expenses (OpEx), property operating income before loan payments and taxes.How to calculate NOI
3. Debt & Financing Terms
Illustrative Rule: Stable Cushion
Meets this tool's illustrative risk rule (modeled benchmark: DSCR ≥ 1.25x & BER ≤ 85%). Actual lender underwriting criteria vary widely by institution, loan program, and asset profile.
EGI minus operating expenses (before debt)
NOI ÷ Purchase Price (unleveraged yield)
(NOI − Annual Debt Service) ÷ Cash Invested
NOI ÷ Annual Debt Service (loan payment coverage)
(Operating Expenses + Annual Debt Service) ÷ EGI — share of effective gross income consumed by expenses and debt.
(Operating Expenses + Annual Debt Service) ÷ GPI — simplified occupancy rate on gross potential income needed to cover expenses and debt.
Meets this tool's illustrative risk rule (modeled benchmark: DSCR ≥ 1.25x & BER ≤ 85%). Actual lender underwriting criteria vary widely by institution, loan program, and asset profile.
Underwriting Input Parameters
| Purchase Price ($): $2,800,000 | Closing Costs (%): 2% ($56,000) | Gross Potential Income (GPI, $): $336,000 |
| Vacancy & Credit Loss (%): 5% ($16,800) | Effective Gross Income (EGI): $319,200 | Annual Operating Expenses ($): $92,000 |
| Down Payment (%): 25% ($700,000) | Loan: $2,100,000 | Interest Rate (%) / Amortization Term (Yrs): 6.5% / 25 Years |
Calculated Core CRE Metrics & Stress Test
| Core Metric | Base Case | Stressed Case (+5 pts Vac, +100 bps Rate) |
|---|---|---|
| Net Operating Income (NOI) | $227,200 | $210,400 |
| Cap Rate | 8.11% | 7.51% |
| Cash-on-Cash Return | 7.55% | 3.20% |
| DSCR (Debt Coverage) | 1.34x | 1.13x |
| Break-Even Ratio (BER) | 82.13% | 92.01% |
| Break-Even Occupancy (BEO) | 78.02% | 82.81% |
| Annual Debt Service | $170,152 | $186,226 |
What This CRE Calculator Does
Underwriting a real deal requires looking at multiple performance metrics simultaneously. This commercial real estate investment calculator takes a single set of inputs and generates all core yields: Cap Rate, DSCR, Cash-on-Cash Return, and Break-Even Ratio and Break-Even Occupancy. Note that Cash-on-Cash calculates returns based on your total cash invested (down payment plus closing costs), while NOI explicitly excludes your debt service payments. Easily model a base scenario, then stress-test the underwriting against tougher vacancy and loan rate environments.
Core Underwriting Metrics & Formulas
• NOI = Effective Gross Income - Operating Expenses
• Cap Rate = NOI / Purchase Price × 100%
• Cash-on-Cash Return = (NOI - Annual Debt Service) / Total Cash Invested × 100%
• DSCR = NOI / Annual Debt Service
• Break-Even Ratio = (Operating Expenses + Annual Debt Service) / Effective Gross Income × 100%
• Break-Even Occupancy = (Operating Expenses + Annual Debt Service) / Gross Potential Income × 100%Worked Commercial Property Example
Consider a hypothetical 24-unit multifamily property with the following acquisition and operational assumptions:
- Purchase price: $2,800,000
- Gross potential income: $336,000
- Vacancy: 5%
- Operating expenses: $92,000
- Down payment: 25% ($700,000)
- Closing costs: 2% ($56,000)
- Commercial loan: 6.5% interest rate, 25-year amortization
First, deducting vacancy gives an Effective Gross Income (EGI) of $319,200. After subtracting operating expenses, we can calculate the property's NOI at $227,200. Based on the purchase price, this translates to an 8.11% unleveraged Cap Rate.
Based on the loan terms, the annual debt service is $170,152. By dividing the NOI by the debt service, we test the lender's DSCR threshold, resulting in a healthy 1.34x coverage. The pre-tax cash flow after debt is $57,048. Compared against the $756,000 total cash invested (down payment + closing costs), we measure cash return on invested equity which yields 7.55%. Currently, the Break-Even Ratio (BER) is 82.13% (with a simplified Break-Even Occupancy of 78.02%).
The base case appears healthy, but what happens if vacancy rises to 10% and interest rates climb to 7.5%?
Annual debt service climbs to $186,226, while NOI drops to $210,400. In this scenario, the DSCR plummets to 1.13x (which, depending on the specific loan agreement covenants, may trigger lender watchlists, cash sweeps, or technical default discussions), and the Cash-on-Cash Return shrinks to 3.20%. The Break-Even Ratio rises to 92.01% (with Break-Even Occupancy reaching 82.81%), pushing into the high-risk zone. This demonstrates why comprehensive underwrite a commercial real estate deal must evaluate downside resilience across multiple scenarios.
Institutional Underwriting Pitfalls & Common Mistakes
1. Overlooking Stress Testing: Underwriting only base-case pro-formas is dangerous. It is prudent to model sensible downside scenarios (such as +5 percentage points vacancy or +100 bps interest rate increases) to evaluate debt coverage cushion, rather than assuming a single static projection applies to every deal.
2. Under-budgeting Replacement Reserves: Omitting capital expenditure reserves (e.g., $250-$350/unit/yr) creates artificially inflated initial cash flow.
Frequently Asked Questions
Why does this give different numbers than running each calculator separately?
It shouldn't — Deal Analyzer uses the exact same calculation logic as our individual Cap Rate, NOI, Cash-on-Cash, DSCR, and Break-Even Ratio calculators. The advantage here is entering your numbers once instead of five times, which also eliminates the risk of accidentally using slightly different inputs across separate tools.
What stress test assumptions does this use, and can I customize them?
By default, the stress test applies +5 percentage points of vacancy and +100 basis points of interest rate — a moderate, not worst-case, scenario. This matches the stress-testing approach described in our How to Underwrite a Deal guide. Custom stress scenarios may be added in a future update.
Is the PDF export suitable for a formal loan application?
No — treat it as a working summary for your own analysis or informal discussion with a partner or lender, not a substitute for the formal underwriting package (verified financials, appraisal, etc.) a lender will require.