Acquisition underwriting calculator
Put in the deal you're looking at; every figure is yours to change. You'll see what it yields, whether a loan covers, what your return looks like, and the highest price that still hits your target.
Most you can pay for a 12% IRR
$4,557,607
$442,393 below the price you entered
| Net operating income | $313,600 |
|---|---|
| Going-in cap rate | 6.27% |
| Yield on total cost | 6.09% |
| Loan amount | $3,250,000 |
| Equity required | $1,900,000 |
| DSCR | 1.13x |
| Debt yield | 9.6% |
| Cash-on-cash, year one | 1.9% |
| Break-even occupancy | 85.9% |
| Levered IRR | 6.7% |
| Unlevered IRR | 6.9% |
| Equity multiple | 1.37x |
| Transfer tax estimate | $0 |
These are estimates from the numbers you entered, not a forecast, an appraisal or a promise of any return. Your numbers stay in your browser unless you send them.
What the numbers mean
Going-in cap rate is year-one NOI divided by the price. Yield on total cost divides the same NOI by everything you put in, including repairs and closing costs, which is the number to compare with the loan's annual constant (the yearly payment per dollar borrowed), not just its rate.
DSCR is NOI divided by the year's loan payments. The commercial loans CBRE originated or brokered in Q2 2026 averaged 1.43x; on apartments, Freddie Mac's published minimum for loans with terms of seven years or more is 1.25x. If yours is lower, expect the lender to cut the loan to fit.
Break-even occupancy is the share of gross income you need to collect to pay operating expenses and the loan. The closer it is to 100%, the less vacancy the deal can absorb before you're paying the mortgage out of pocket.
Most you can pay solves for the price that gets your levered IRR to the target, holding the loan-to-value, rent, expenses and exit cap rate where you set them. It's the number to bring to a negotiation.
What this leaves out
Income taxes and depreciation (nonresidential real property is depreciated over 39 years and residential rental property over 27.5 years under the IRS's general system, per IRS Publication 946), property tax reassessment after the sale, and leasing commissions and tenant improvements. Any of them can move the answer.
Questions
How do you underwrite a commercial property purchase?
Start from net operating income: rent and other income, less vacancy, less operating expenses including taxes and insurance. Divide by the price for the going-in cap rate, compare the cash flow after debt service with your equity for cash-on-cash, and project a sale to get the IRR. Then ask the question that decides the offer: what is the most you can pay and still hit your target return?
What happens when the loan costs more than the property yields?
Every dollar you borrow lowers your cash return. If the going-in cap rate is below the loan constant (the annual payment per dollar borrowed), borrowing more makes the cash-on-cash return worse, not better. A property bought at a 6.5% cap rate with a 7% loan on a 25-year amortization (about an 8.5% annual constant) is in that position.
Ready to price the loan?
Send the deal to Janover Capital about acquisition financing. A person will reply.