NOI → Cash Flow After Debt Service

Calculates cash flow before and after debt service by netting capital costs, reserves, and loan payments out of NOI, then relates the result to equity invested and an implied value at a cap rate. Inputs include annual NOI, capital project and reserve line items, principal and interest payments, equity invested, and a cap rate.

Interactive Tool

Inputs

Net Operating Income (annual)

Unit turn costs

Marketing & leasing

Construction / capital projects

Capital expense reserves

Principal payments

Interest payments

Equity invested

Cap rate (for implied value)

The waterfall

Net Operating Income

$236,218

Unit turn costs

−$10,000

Marketing & leasing

−$8,000

Construction / capital projects

−$15,000

Capital expense reserves

−$30,000

Cash Flow Before Debt Service

$173,218

Principal payments

−$22,893

Interest payments

−$51,584

Cash Flow After Debt Service

$98,741

Cash-on-Cash

6.6%

CFADS ÷ $1,500,000

NOI DSCR

3.17×

coverage 2.33× on CFBDS

Implied Value

$4,294,873

NOI ÷ 5.5%

NOI is $236,218, but only $98,741 reaches equity after capital needs and debt service, a 58.2% reduction. NOI values the property; Cash Flow After Debt Service is what the investor actually keeps.

Learn the concept

This calculator comes from the free Real Estate Finance course, where the concept is taught with readings, worked examples, and practice questions.

Open Real Estate Finance

Built by Devon Coombs, CPA, MBA, Teaching Professor of Finance at Santa Clara University.