Commercial property is valued on the income it produces, not on what the house down the street sold for, and this free calculator estimates value the way investors actually do it. Enter the net operating income and a market cap rate, and you get an estimated value.
This is the income approach, and it is the main way commercial real estate is priced. Master this one relationship and you understand most of how commercial value works. Here is the tool, then the method.
Commercial value, in one line: the income approach values a property as net operating income divided by the market cap rate. A $140,000 NOI at a 7% cap rate is worth about $2,000,000.
Why income, not comps: commercial buildings are priced on the income they produce, so growing NOI or buying before cap rates compress is how you drive value.
How the Property Value Calculator Works
The income approach is simply value = net operating income ÷ cap rate. Enter a clean NOI and the cap rate that comparable properties are trading at, and you get an estimated value. If a property produces $140,000 of NOI and similar deals trade at a 7% cap, it is worth roughly $2,000,000.
The sensitivity is the important lesson. Hold NOI steady and a one-point move in the cap rate swings the value hard, which is why the cap rate you use matters as much as the income. There are other ways to value a property too, and I walk through the main approaches here.
Watch: How to Value Commercial Real Estate [The 4 Main Ways]
Property Value Calculator FAQ
How do you value a commercial property?
The most common method is the income approach: divide the net operating income by the market cap rate. A $140,000 NOI at a 7% cap rate implies a value of about $2,000,000.
Why is commercial property valued on income?
Because investors buy commercial real estate for the income it produces, so its value is tied to net operating income and the return buyers require, not to residential comparable sales.
What cap rate should I use to value a property?
Use the cap rate that comparable properties of the same type are actually trading at in that market. The right cap rate reflects the risk and demand for that asset class today.
How does NOI affect value?
Directly. Since value equals NOI divided by the cap rate, every dollar of added NOI increases value by one divided by the cap rate. At a 7% cap, a dollar of NOI adds about $14 of value.
Ready to run a full deal, not just one metric?
Inside CRE Central you get the complete Deal Analyzer to underwrite a commercial property end to end, plus the training and feedback to do it with confidence.
Explore CRE CentralValue depends on the cap rate you use, so run the numbers in the cap rate calculator, or see all the commercial calculators.