Pillar · Metrics
CRE Metrics & Ratios
The numbers every commercial real estate deal turns on — cap rate, DSCR, IRR and equity multiple, cash-on-cash, debt yield and the rest — each defined plainly, with the formula and a free calculator.
Lenders size a loan to the most conservative of several constraints
The binding one is your real leverage:
- LTV caps the loan at a percentage of value — exposed to appraisal and the rate environment.
- DSCR caps debt service at a multiple of NOI — exposed to rates, since higher payments support a smaller loan.
- Debt yield (NOI ÷ loan) is the rate- and value-blind sanity check: "if I foreclosed tomorrow, what unleveraged yield would this loan throw off?" It doesn't move with rates or cap rates, which is why lenders lean on it.
Whichever produces the smallest loan wins. Identify it and you know where your leverage is actually constrained.
A property with $600,000 NOI at an $8,000,000 price. Lender terms: max 75% LTV, min 1.25x DSCR, min 9% debt yield, 6.5% rate / 30-yr amortization (≈ 7.59% annual mortgage constant).
| Constraint | Calculation | Max loan |
|---|---|---|
| LTV (75%) | 0.75 × $8,000,000 | $6,000,000 |
| DSCR (1.25x) | ($600,000 ÷ 1.25) ÷ 0.0759 | $6,330,000 |
| Debt yield (9%) | $600,000 ÷ 0.09 | $6,670,000 |
All three pass, but the lender funds the lowest: $6,000,000, set by LTV. DSCR and debt yield allow more, so they aren't the constraint — pushing the lender on coverage won't grow the loan; only a higher appraised value or more equity will. The discipline: identify the binding constraint before modeling proceeds. At a lower price relative to NOI, LTV loosens and DSCR or debt yield binds instead — and your negotiating lever changes completely.
How are these numbers computed? See how UpsideIQ underwrites →
Free calculators
Cap Rate Calculator
See the broker cap and the true (post-reserves) cap side by side — the gap sellers don't show you.
Open the calculator → CalculatorDSCR Calculator
Check whether NOI covers debt service — the first test every lender runs.
Open the calculator → CalculatorDebt Yield Calculator
NOI ÷ loan amount — the rate-blind, value-blind floor lenders trust most. See whether your loan clears the 8–10% line.
Open the calculator → CalculatorLTC / LTV Calculator
Loan-to-cost and loan-to-value from one set of inputs — and which one actually caps your loan.
Open the calculator → CalculatorIRR & Equity Multiple Calculator
Estimate levered return and total multiple from a simple cash-flow stream.
Open the calculator → CalculatorEquity Waterfall Calculator
See how a deal splits between LP and GP — return of capital, preferred return, GP catch-up, then promote by LP IRR hurdle.
Open the calculator → CalculatorMultifamily Pro Forma Calculator
Units in, returns out — GPR, NOI, cap rate, DSCR, and cash-on-cash in one quick estimate.
Open the calculator → CalculatorGross Rent Multiplier Calculator
Price ÷ gross annual rent — the fastest screen there is, with the cap-rate cross-check GRM leaves out.
Open the calculator → CalculatorYield on Cost Calculator
Stabilized NOI ÷ total project cost — the cap rate you build, and the spread over the market cap that pays you to build it.
Open the calculator → CalculatorBreak-Even Occupancy Calculator
The occupancy you must hold to cover expenses and debt — and how much vacancy cushion you have above it.
Open the calculator →Guides & teardowns
Cap Rate vs. Cash-on-Cash Return
Cap rate vs cash on cash return explained — cap rate is the unlevered yield on price, cash-on-cash is the levered yield on the equity you actually invest.
Read → metricsDebt Yield, Explained (and Why Lenders Trust It)
Debt yield explained — NOI divided by loan amount, the rate-blind, value-blind lender floor that does not move when interest rates or cap rates do.
Read → metricsThe Equity Waterfall, Explained (GP/LP Splits)
Equity waterfall explained — how distributions flow through return of capital, preferred return, and an 80/20 promote split between LP and GP.
Read → metricsLTV vs. LTC: Two Leverage Tests, One Loan
LTV vs LTC explained — loan-to-value measures debt against appraised value, loan-to-cost against total project cost, and lenders size to the lower loan.
Read → metricsPreferred Return: How the 8% Pref Works
Preferred return explained — how the 8% pref is calculated on LP capital, the order it's paid in, and how compounding changes an unpaid year.
Read → metricsReal Estate Promote (Carried Interest), Explained
Real estate promote (carried interest) explained — how a GP earns 20% of profit above the preferred return, why it's an incentive, and how tiers work.
Read → TeardownGreat IRR, No Cash Flow
A deal projecting a 20% IRR and 2.0x multiple with almost no cash flow — why back-end-loaded returns are fragile and what to check before you trust an IRR.
Read → underwritingHow to Calculate a Cap Rate (and What a Good One Looks Like)
Cap rate = NOI ÷ price. Which NOI to use, what counts as a good cap rate by asset class, and the broker-vs-true caveat that decides the price.
Read → underwritingHow to Calculate DSCR and Why Lenders Care
DSCR = NOI ÷ annual debt service. Here's how to calculate it, the ~1.20–1.25x minimum lenders expect, and how it caps the loan you can actually get.
Read → underwritingIRR vs. Equity Multiple: How to Read CRE Returns
IRR measures the speed of return; equity multiple measures the total. What each captures, why you need both, and how hold period distorts the comparison.
Read →Key terms
Other underwriting hubs
Get the full underwriting, grade & PDF — free
Tell UpsideIQ your investment criteria once — every deal gets analyzed, graded, and flagged against YOUR targets, not a generic score.