How to read this result
In the default example, property a cap rate is 7.00%. Metric differences are B minus A. They do not identify an investment winner.
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
For each property separately, divide NOI by price for cap rate and annual cash flow by invested cash for cash-on-cash. Compare the two percentages on their own stated bases; deltas are Property B minus Property A.
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
- Property A price (USD)
- Property A price. Minimum: 0.
- Property A NOI (USD/year)
- Property A NOI.
- Property A annual cash flow (USD/year)
- Property A cash flow.
- Property A cash invested (USD)
- Property A cash invested. Minimum: 0.
- Property B price (USD)
- Property B price. Minimum: 0.
- Property B NOI (USD/year)
- Property B NOI.
- Property B annual cash flow (USD/year)
- Property B cash flow.
- Property B cash invested (USD)
- Property B cash invested. Minimum: 0.
Worked example
This example uses the exact prefilled inputs above. Reset defaults to restore this scenario after making changes.
| Item | Default scenario |
|---|---|
| Property A price | $400,000.00 |
| Property A NOI | $28,000.00 |
| Property A annual cash flow | $8,000.00 |
| Property A cash invested | $100,000.00 |
| Property B price | $450,000.00 |
| Property B NOI | $31,500.00 |
| Property B annual cash flow | $10,800.00 |
| Property B cash invested | $120,000.00 |
| Item | Default scenario |
|---|---|
| Property A cap rate | 7.00% |
| Property A cash-on-cash | 8.00% |
| Property B cap rate | 7.00% |
| Property B cash-on-cash | 9.00% |
| Metric deltas | B − A: cap rate 0.00 pp; cash-on-cash 1.00 pp |
Assumptions and limitations
Comparison does not rank risk, location, liquidity, taxes, financing quality or future appreciation.
Metric differences are B minus A. They do not identify an investment winner.
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
Do not mix stabilized NOI for one property with optimistic first-year income for another. Similar percentages do not imply similar condition, liquidity, tenant quality or risk.
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
Does the comparison choose a winning property?
No. It displays comparable metrics and their differences without ranking the investment or making a recommendation.
Can two properties share a cap rate but have different equity returns?
Yes. Their prices and NOI may be proportional while their debt payments, cash invested or other cash costs differ.