Tools
Does this deal actually work?
Cap rate, cash flow, cash-on-cash and the debt coverage your lender will ask about — worked out before you write an offer.
What it means
- Net operating income
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- Mortgage payment monthly
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- Annual debt service
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- Cash flow monthly, before tax
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- Cash in the deal
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- Loan amount
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An estimate to help you think, not a lender quote or financial advice. Canadian mortgages compound semi-annually and that is what this uses, but rates, lender ratios, taxes and operating costs all move. Check the real numbers with your lender and accountant before you commit.
Running numbers on something specific?
Send me the dealReading the result
What each number is telling you
Cap rate
Net operating income divided by price. It ignores your mortgage entirely, which is the point — it lets you compare two buildings on their own merits, whoever is buying and however they finance it.
Cash-on-cash return
What the cash you actually put in earns in a year. Two deals can share a cap rate and return very differently once the financing is in, which is why this one moves when you change the down payment.
DSCR
Net operating income divided by the mortgage. Commercial lenders usually want 1.20 or better — the income covering the debt with room to spare. Below that, expect a larger down payment or a no.
Where deals go wrong
Optimistic rent and forgotten operating costs. Ask for the actual rent roll and two years of real expenses, not a pro forma. A vacancy allowance of zero is a guess, not a number.