Commercial real estate is a numbers game. Use these tools to evaluate a deal, stress-test assumptions, or get a baseline before a conversation.
The capitalization rate tells you the expected return on a property if you bought it all cash. It's the most common benchmark in commercial real estate — and the most frequently misunderstood.
Net Operating Income is the foundation of every commercial real estate valuation. Get this number right and everything else follows.
Cash-on-cash measures your actual cash return relative to the cash you put in — accounting for debt service. This is the number that tells you if the deal actually works for you as an investor.
Debt Service Coverage Ratio is what your lender is looking at. Most commercial lenders require a minimum DSCR of 1.20–1.25x. Below 1.0x means the property can't cover the debt.