Real Estate · Acquisition

Cap Rate Underwriter

Type in the deal. The rate decides.

1List Price
2Your Offer
3Rent Roll
4Expenses
5Target Cap
Cap Rate
Current @ List
4.82%
$949,000
Current @ Offer
5.08%
$900,000
Pro Forma @ List
6.43%
$949,000
Pro Forma @ Offer
6.78%
$900,000
Below target
Even pro forma rents miss 7.75% at $900,000 by $729/mo. Push the price down or the rents up.
The Deal
$
$
%
−$49,000 · 5.2%
Rent Roll · Income
UnitCurrent /moPro Forma /mo
$
$
$
$
$
$
$
$
Current Gross Income$80,700/yr
Pro Forma Gross Income$96,000/yr
Net Operating Income
$
$
Current
Gross Income$80,700
Less: Expenses−$35,000
NOI$45,700
Pro Forma
Gross Income$96,000
Less: Expenses−$35,000
NOI$61,000

Split expenses by scenario: current operations vs. your pro forma plan. Leave either at $0 to treat gross rent as NOI. This NOI drives every cap rate above.

What It's Worth
%
%
%
%
Cap RateImplied Valuevs. Your Offer
6.00%$1,016,667+$116,667
6.50%$938,462+$38,462
6.78% ◂ your offer$900,000+$0
7.00%$871,429−$28,571
7.50%$813,333−$86,667
7.75% ◂ target$787,097−$112,903
8.00%$762,500−$137,500
8.50%$717,647−$182,353
9.00%$677,778−$222,222
9.50%$642,105−$257,895
10.00%$610,000−$290,000
Cap rate = NOI ÷ price · NOI = gross income − operating expenses.
Underwriting aid for decision support. Not financial advice.