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Cap Rate & Cash-on-Cash Return

Evaluate opportunities using cap rate (unlevered), yield on cost, and levered returns with simple financing.

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Purchase & Project Costs

Total Project Cost$870,000

Net Operating Income (NOI)

Need help estimating NOI?
Helper NOI (annual): $34,140
NOI = GPR − vacancy + other income − fixed − variable (% of GPR)

Simple Financing (for levered returns)

Loan amount$637,500
Cash invested$232,500
Cap Rate & Cash-on-Cash — Summary
Prepared February 13, 2026

Unlevered Metrics

NOI (annual)$45,000
Cap Rate (NOI ÷ Price)5.29%
Yield on Cost (NOI ÷ Project Cost)5.17%

Yield on Cost accounts for closing costs and initial renovations.

Debt Service & Coverage

Annual Debt Service (ADS)−$46,978
DSCR (NOI ÷ ADS)0.96
Debt Yield (NOI ÷ Loan)7.06%

Many lenders look for DSCR ≥ 1.20 and Debt Yield ≥ 8–10% (program-dependent).

Levered Returns

Levered Cash Flow (NOI − ADS)-$1,978
Cash Invested$232,500
Cash-on-Cash Return-0.85%
Assumptions & Notes
  • NOI excludes debt service and income taxes; includes typical operating expenses.
  • Cap Rate uses purchase price only. Yield on Cost uses price + closing + initial CapEx.
  • Cash-on-Cash = (NOI − ADS) ÷ (Down + Closing + Initial CapEx).
  • Estimates only; actual results vary with rents, expenses, and financing terms.