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For brokers, appraisers & investors
Income Proforma Calculator
Enter annual property income, operating expenses, cap rate, financing, and exit assumptions to estimate NOI, value, cash flow, and leveraged IRR.
How to use this calculator
- Enter annual income. Use stabilized gross potential income, then add vacancy and other property income.
- Add operating expenses. Include recurring property costs before debt service and income taxes.
- Choose a cap rate. Use a market-supported rate for the property type, condition, and location.
- Add financing. Set leverage, interest rate, and amortization to calculate debt service and annual cash flow.
- Set the exit assumptions. Choose a hold period, growth rates, exit cap rate, and selling costs to estimate sale proceeds and IRR.
- Review the returns. Compare NOI, cash flow, DSCR, cash-on-cash return, equity multiple, and IRR.
Tips
- Use an exit cap rate at least as high as the going-in cap rate for a conservative base case.
- IRR is sensitive to the sale price, so test slower growth and a higher exit cap rate.
- NOI excludes debt service, depreciation, income taxes, and major capital projects.
Income (annual)
Operating expenses (annual)
Valuation
Hold period & sale
DSCR analysis
AverageWorkable for bridge or value-add lenders, but below the 1.25x agency floor for stabilized assets.
- Debt service+11.1%Cut loan 10% (~$390,240 less debt) → 1.34x DSCR.
- NOI+10.0%Each 10% NOI lift → +$39,024/yr → 1.33x DSCR.
- Interest rate+9.8%Drop rate 100 bps to 5.75% → 1.32x DSCR.
- Amortization+6.5%Extend to 30 years → 1.28x DSCR.
Proforma summary
| Gross potential income | $600,000 |
| Less: vacancy & credit loss | ($30,000) |
| Plus: other income | $24,000 |
| Effective gross income | $594,000 |
| Less: management fee | ($23,760) |
| Less: other operating expenses | ($180,000) |
| Net operating income | $390,240 |
| ÷ Cap rate | 6.5% |
| Estimated property value | $6,003,692 |
Projected cash flow by year
| Year | Cash flow |
|---|---|
| 1 | $66,694 |
| 2 | $78,402 |
| 3 | $90,460 |
| 4 | $102,880 |
| 5 (includes sale) | $2,903,254 |
Property-specific proforma calculators
Use a specialized calculator when the property's income is driven by units, hotel rooms, or leased square footage.
Multifamily / Apartments Income Proforma
Apartment buildings, garden complexes, mid- and high-rise rentals. NOI, cap-rate value, value per door, DSCR, and cash-on-cash.
Hotel / Hospitality Income Proforma
Limited- and full-service hotels valued by ADR × Occ × Keys. RevPAR, room revenue, F&B, NOI, and value per key.
Retail / Shopping Center Income Proforma
NNN single-tenant, strip centers, and shopping centers. Base rent PSF, CAM recoveries, percentage rent, and value per SF.
Office Building Income Proforma
Class A towers, suburban office, and medical office. Rent PSF, expense stops, parking income, NOI, and value per RSF.
Industrial / Warehouse Income Proforma
Bulk distribution, last-mile, flex/R&D, and cold storage. NNN rent PSF, recoveries, NOI, and value per SF.
How commercial real estate is valued
Every income-producing commercial property is valued the same way: NOI ÷ cap rate. The differences are in how income is generated and which secondary metric the market uses to compare deals.
Per-unit / per-key assets — multifamily and hotels — are valued largely by the count of income-producing units. A 24-unit apartment building or a 120-key limited-service hotel is benchmarked against price per door or price per key in the submarket.
Per-square-foot assets — retail, office, and industrial — are valued on rent PSF and priced PSF, with cap rates that reflect tenant credit, lease term, and submarket fundamentals.
All five calculators share the same underlying engine, so you can change a cap rate or LTV in one tool and see how it would flow through the others. None of this is investment advice — these are quick underwriting tools, not appraisals.
Red flags to watch on any proforma
The most common proforma manipulation is understated vacancy. A seller who shows 5% vacancy in a submarket running 12% is either cherry-picking a lucky trailing quarter or assuming perfect management. Always cross-check physical occupancy, economic occupancy (net of concessions and bad debt), and market vacancy from a third-party source like CoStar, REIS, or the local apartment association.
Another warning sign is deferred maintenance buried in operating expenses. If repairs and maintenance are $200 PSF lower than comparable properties, the seller may have stopped spending to boost NOI before sale. Capital expenditures are not part of NOI, but they affect cash flow. Ask for a 5-year history of actual CapEx, not just the reserve line item.
Finally, verify that the cap rate reflects the actual risk profile, not the broker's marketing materials. A 5% cap rate on a Class B office with 18 months average lease term and a single tenant above 40% of rent is aggressive. Compare to recent trades in the same submarket, same property type, and similar vintage. When in doubt, underwrite to a higher exit cap rate than the going-in cap rate — markets rarely compress forever.
Frequently asked questions
What is a commercial real estate proforma?
A proforma is a forward-looking statement that projects a property's gross income, vacancy, operating expenses, and net operating income (NOI), then capitalizes NOI at a market cap rate to estimate value. Lenders and investors use it to underwrite acquisitions, refinances, and ground-up development.
How is commercial property value calculated?
Income-producing commercial property is valued as NOI ÷ cap rate. NOI is gross income minus vacancy and operating expenses (but before debt service, depreciation, and capital expenditures). The cap rate is set by the market for the property type, location, and tenant credit.
Which proforma calculator should I use?
Pick by property type: multifamily for apartments (per-door valuation), hotel for hospitality (per-key, ADR × Occ), retail/office/industrial for commercial leased space (per-square-foot rent and value).
What's the difference between cap rate and cash-on-cash return?
Cap rate is NOI ÷ purchase price — an unlevered yield. Cash-on-cash return is annual pre-tax cash flow ÷ equity invested — a levered yield that depends on loan terms. Both calculators report each metric.
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Before you act on this result
This calculator is general education, not advice. Before you sign, file, offer, or fund anything, walk through this quick checklist:
- Confirm every input (price, rate, taxes, insurance, HOA, fees) against a real document — a Loan Estimate, purchase contract, tax bill, or HOA statement — not a guess.
- Verify the local rules where the property sits: closing customs, transfer taxes, disclosure requirements, and title practices differ by state and county.
- Talk to a licensed professional in that jurisdiction — a local real estate broker, closing attorney or title company, CPA, state-licensed appraiser, or mortgage loan officer.
- Remember Larius is licensed as a real estate broker in North Carolina only. Anything outside NC needs a locally licensed pro.
- Get material assumptions in writing (rate lock, insurance quote, tax cap, rent comps) before you commit money or sign.
Read our Editorial FAQ for the full education-vs-advice breakdown, or let us know if a number here looks wrong.