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Price Per Square Foot
Value Based on GRM
Standard Valuation Metrics Valuation

Value Based on Cap Rate

Property value estimated by dividing NOI by the cap rate.

Example Result

Sample Data
$396,550

Based on a sample $385,000 property with $2,850/month rent, 20% down, 7% interest rate.

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Value Based on Cap Rate Formula

NOI / Cap Rate
$20,566 / 5.34%
$396,550

What This Means

A sample property priced at $385,000 with $2,850/month rent has a value based on cap rate of $396,550 at Purchase (Month 0). This tells you what the property is worth based purely on income. If the asking price is much higher than this value, the seller is pricing in future upside. If lower, the property may be undervalued relative to its income.

Where This Value Comes From

Value Based on Cap Rate is not entered directly — it is calculated from Net Operating Income and Cap Rate. See the formula breakdown above and the detailed inputs below.

Inputs That Determine Value Based on Cap Rate

Platform Distribution

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Why It Matters

This tells you what the property is worth based purely on income. If the asking price is much higher than this value, the seller is pricing in future upside. If lower, the property may be undervalued relative to its income.

Detailed Explanation

This income-approach valuation divides the NOI by the property's cap rate to estimate market value. This method is widely used in commercial real estate and shows what the property "should" be worth based on its income.

Example

Sample Result
$385,000

Based on a sample $385,000 property with $2,850/month rent, 20% down, 7% interest rate.

Related Calculations

Price Per Unit

2

Purchase price divided by number of units.

$385,000 Example

Price Per Square Foot

2

Purchase price divided by total square footage.

$256.67 Example

Value Based on GRM

U

Property value estimated using the gross rent multiplier.

$396,550 Example

Cost Approach Value

W

Estimated value based on land value plus depreciated replacement cost.

$214,250 Example

Equity Position Current

2

Current property value minus outstanding loan balance.

$91,679 Example

Equity as Percent of Value

2

Current equity as a percentage of property value.

23.12% Example

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