FAQ

What is a cap rate?
The unlevered yield on a property’s current NOI at a given price.

Does the calculator include financing?
No, this is pre-debt. It’s meant for apples-to-apples valuation.

What NOI should I use?
Stabilized annual NOI (rents + other income − vacancy/credit loss − OpEx). Exclude loan payments and capital improvements.

How precise is this?
It’s a guide. Actual pricing depends on lease terms, credit, rollover, condition, location, and debt markets.

Can I use this for development deals?
For stabilized yield, yes. For projects, pair this with a pro forma and a yield-on-cost analysis.

What’s next if I like the numbers?
Request a Broker Opinion of Value, and we’ll benchmark comps, cap rates, and buyer pools for your submarket.

What vacancy should I assume?
Use actual vacancy for in-place, and a market vacancy (e.g., 5%–10%) for stabilized/pro forma.

Can I use this for development deals?
Use a stabilized NOI and a market exit cap once the project is leased. For construction periods, build a cash-flow model.

Gross vs. NNN Leases—How Do I Handle Them?
For gross, expenses are on the owner; for NNN, tenants reimburse most OpEx. Just ensure the NOI reflects the true net.

How do short remaining lease terms impact the cap rate?
Shorter WALT usually means a higher (softer) cap due to rollover risk; adjust the cap rate accordingly.

Where do market cap rates come from?
Recent comps, broker opinions (BOV), research reports, lender/appraisal data, and active buyer feedback.