How to read this result
In the default example, annual unit rent is $259,200.00. Results describe this input scenario; they are not a recommendation.
Change one assumption at a time to see how it affects the scenario. Compare periods and cost definitions consistently. Negative results show a modeled shortfall; an unavailable ratio needs a valid denominator.
Formula and methodology
Multiply unit count, occupancy, average monthly rent and 12. Add ancillary income, then deduct annual operating expenses for NOI. Calculate cap rate on total investment and cash flow after debt service; use invested cash for cash-on-cash.
Enter percentages as whole numbers: 5 means 5%. When used as a factor, the calculation divides a percentage by 100. Percentage outputs multiply the final ratio by 100. Calculations retain precision internally; displayed amounts and rates are rounded to two decimals.
Variables and input definitions
- Total units (units)
- Facility unit count. Minimum: 1.
- Occupancy rate (%)
- Occupied share. Minimum: 0. Maximum: 100.
- Average monthly rent per occupied unit (USD/unit/month)
- Average rent. Minimum: 0.
- Annual ancillary income (USD/year)
- Admin, retail, insurance or other income. Minimum: 0.
- Annual operating expenses (USD/year)
- Facility operating expenses. Minimum: 0.
- Annual debt service (USD/year)
- User-entered debt service. Minimum: 0.
- Total property investment (USD)
- Purchase/total investment basis. Minimum: 0.
- Total cash invested (USD)
- Investor cash/equity. Minimum: 0.
Worked example
This example uses the exact prefilled inputs above. Reset defaults to restore this scenario after making changes.
| Item | Default scenario |
|---|---|
| Total units | 200 |
| Occupancy rate | 90.00% |
| Average monthly rent per occupied unit | $120.00 |
| Annual ancillary income | $20,000.00 |
| Annual operating expenses | $100,000.00 |
| Annual debt service | $80,000.00 |
| Total property investment | $1,800,000.00 |
| Total cash invested | $500,000.00 |
| Item | Default scenario |
|---|---|
| Annual unit rent | $259,200.00 |
| Gross income | $279,200.00 |
| NOI | $179,200.00 |
| Cap rate | 9.96% |
| Annual cash flow | $99,200.00 |
| Cash-on-cash return | 19.84% |
Assumptions and limitations
Does not model unit-size mix, dynamic pricing, delinquency or capex unless user includes them.
Results describe this input scenario; they are not a recommendation.
The tool uses values you supply. It does not retrieve market prices, verify leases or inspect a property. Results exclude items outside the listed inputs. Review local requirements and the relevant contract when a payment, fee or allocation depends on them.
Common mistakes
This average-rent model does not separate unit sizes or physical from economic occupancy. Include management costs within operating expenses and avoid reducing the same income twice.
Sources and method references
These references provide context for the method and terminology. They do not endorse this tool or validate your property assumptions.
- Office of the Comptroller of the Currency — Comptroller's Handbook — Commercial Real Estate LendingNOI, direct capitalization, cap-rate valuation and DCF concepts for commercial real estate.
Frequently asked questions
Are occupied units rounded to whole units?
No. Occupancy represents an annual average and can imply a fractional average occupied count. The total facility unit count must be whole.
Why are total investment and cash invested separate?
Total investment is the property-level cost basis. Cash invested is the equity contribution used for cash-on-cash, which may differ because of financing.