Value is NOI divided by a small number, so the same move is worth more downward than upward. This is why arguing 25 basis points on a low-cap deal is a real negotiation and not a rounding conversation.
| Cap rate | Implied value | Difference |
|---|---|---|
| 5.00% | $12,000,000 | +$2,000,000 |
| 5.50% | $10,909,091 | +$909,091 |
| 5.75% | $10,434,783 | +$434,783 |
| 6.00%This scenario | $10,000,000 | |
| 6.25% | $9,600,000 | -$400,000 |
| 6.50% | $9,230,769 | -$769,231 |
| 7.00% | $8,571,429 | -$1,428,571 |
Going-in convention throughout: year-one NOI over the purchase price. Whether the price includes closing costs and whether reserves sit above the NOI line are choices this page cannot make for you; state them with the number, and hold them constant across every comparable.
Everything above is computed in your browser. Nothing you type is sent to Altyst or to the site hosting this calculator, and this frame sets no cookie. It is arithmetic on the figures you entered, not investment, lending, or appraisal advice.
A cap rate is one division on one NOI. A real underwriting builds that NOI from the rent roll and the T-12, sizes the debt, and carries the deal to an exit. Altyst reads the documents and builds all of it.