Value commercial property using the income approach
For commercial investors and appraisers valuing property: value = stabilized NOI divided by market capitalization rate.
Commercial Property Value Calculator
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Create Free AccountWhat it does
The Commercial Property Value Calculator determines commercial property value using the income approach by dividing stabilized NOI by a market cap rate, providing a valuation method independent of transaction prices. Input NOI and cap rate to calculate intrinsic income-based value.
Commercial properties are valued by income generation, not comparable sales. This calculator applies the income approach — the standard commercial valuation methodology — to translate NOI into property value so investors understand intrinsic worth independent of asking prices.
Who it's for
- Commercial appraisers valuing properties using the income approach
- Investors determining intrinsic value for negotiation strategy and pricing discipline
- Lenders validating collateral value for underwriting and loan sizing
- Analysts comparing values across properties and markets using consistent methodologies
How it works
Calculate stabilized NOI
Gross potential income minus all operating expenses at stabilized occupancy (typically 90–95%).
Determine market cap rate
Research recent sales in your area by property type and risk profile.
Divide NOI by cap rate
Value = NOI ÷ cap rate. Higher cap rate = lower value; lower cap rate = higher value.
Why it matters
Determine property value using income approach
Compare income-based value to market comparables
Model how rent growth or expense reduction affects value
Justify purchase price or assess current valuation
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Frequently asked questions
What cap rate should I use?
Research recent sales of comparable properties. Office: 4–7%; retail: 5–8%; industrial: 4–6%. Use market data, not guesses.
Should I use actual or stabilized NOI?
Use stabilized NOI (long-term average occupancy/expenses), not current year. Removes temporary vacancy or one-time costs.
How does cap rate change?
Lower interest rates = lower cap rates = higher values. Economic uncertainty = higher cap rates = lower values. Track market.
Is income approach the only way to value?
No — also sales comparison (comps) and cost approach (replacement cost). Income approach best for rentals; use all three for full picture.
Is this calculator free to use?
Yes — create a free Investor Starter account to run 1 calculator per day. No credit card required. Upgrade to Core ($49/mo) for unlimited access to all 67 calculators.
How accurate are the results?
Results are only as accurate as your inputs. The formulas use industry-standard real estate investment math. Always verify with a licensed professional before committing capital.
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Open calculatorCommercial DSCR Calculator
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