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*How to calculate your commercial real estate’s key metrics*

*How to calculate your commercial real estate’s key metrics*

November 11, 2017

How to calculate your commercial real estate’s key metrics

1. Net Operating Income (NOI): The property’s first year gross operating income, less the year’s operating expenses.

2. Cap Rate: The capitalization rate shows the value of income-producing properties. Calculate Cap Rate like this: divide the investment’s net operating income (NOI) by the current market value of the property. The formula can be expressed in the following way:

Capitalization Rate = Net Operating Income / Current Market Value

3. Cash on Cash: Compares the first-year performance of competing properties. The formula to determine Cash on Cash is the annual dollar income divided by the total dollar investment.

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