Commercial Property Calculator

How this calculator works

Commercial loans usually have an amortization longer than the term, so a balloon comes due, and lenders test the deal with both DSCR and debt yield. Net leases shift some expenses to tenants through reimbursements.

NOI = rent + other income − vacancy − (expenses − tenant reimbursements).
DSCR = NOI ÷ annual debt service; debt yield = NOI ÷ loan amount.
Replacement reserves are subtracted below NOI, before cash flow.

Worked example

Example values are illustrative, not quotes or market data. These are the numbers the calculator above starts with.

Inputs

Gross scheduled rent per year: $180,000
Other income per year: $0
Vacancy and credit loss: 7%
Expense reimbursements from tenants (NNN/CAM): $0
Property taxes: $32,000
Insurance: $14,000
Utilities: $6,000
Repairs and maintenance: $9,000
Common area and other: $5,000
Management (% of EGI): 5%
Replacement reserves (below NOI): $4,000
Price: $1,400,000
Loan-to-value: 70%
Rate: 7.25%
Amortization (years): 25
Term / balloon (years): 10
Closing costs: $25,000

Results

NOI: $93,030
DSCR: 1.09
Cap rate: 6.64%
Cash flow: $4,028
Balloon: $775,966

Common questions

What is debt yield?

NOI divided by the loan amount. Lenders use it because it does not depend on the interest rate or amortization.

Why is there a balloon?

Many commercial loans amortize over 20 to 30 years but are due in 5 to 10. The remaining balance must be refinanced or paid.

Does Michael help with commercial property?

Yes. Michael O'Neal handles commercial real estate as well as residential.

Related calculators

Estimate only. Actual loan terms, eligibility, insurance, taxes, and settlement charges require verification. These are planning estimates, not a lender Loan Estimate, Closing Disclosure, appraisal, or approval. Michael O'Neal is a real estate broker, not a lender, appraiser, attorney or tax adviser.