RentalCalcs · California research · Reviewed October 18, 2026

From a market cap rate to a defensible bid

Complete this worksheet with property evidence. The example below is hypothetical; no market rate or lender approval is implied. Fields stay in this page and are not sent to a server. Use your browser’s print dialog to save a completed PDF.

Return to the California cap-rate report

Property / municipality / county

Purchase price ($)Evidence checked on

1. Reconcile the income

State whether each figure is trailing 12 months, a forward budget or a stabilized projection. Reconcile occupied-unit rents, legal increases, concessions and collection history.

Scheduled annual rent ($)Other recurring annual income ($)Vacancy, concessions and collection loss ($)Effective annual income ($)

2. Rebuild expenses for the buyer

Post-purchase property taxes ($/year)Quoted insurance, all required policies ($/year)Management ($/year)Repairs and routine turnover ($/year)Owner-paid utilities ($/year)Payroll, contracts and other recurring costs ($/year)Total operating expenses ($/year)Annual NOI = effective income − expenses ($)

NOI period, reserve convention, expense evidence and unresolved items

3. Match the comparable cap rate

Record source, observation date, geography, property type, sale count, income convention and condition. Keep modeled rates, surveys, asking caps and closed-sale caps separate.

Comparable evidence and adjustments

Going-in cap = NOI ÷ price × 100 (%)Required cap (%)Indicated price = NOI ÷ (required cap ÷ 100) ($)Closing costs + immediate capital work ($)

4. Separate debt and capital costs

Loan amount ($)Annual debt service ($)Annual replacement reserve outside NOI ($)Cash flow = NOI − debt service − reserve ($)Cash invested = price − loan + closing + initial work ($)Cash-on-cash = cash flow ÷ cash invested × 100 (%)

DSCR = lender-underwritten NOI ÷ annual debt service. Debt yield = lender-underwritten NOI ÷ loan amount × 100. Confirm whether the lender deducts replacement reserves; do not deduct them twice.

5. Stress the exit

Exit annual NOI ($)Exit cap (%)Gross exit value = exit NOI ÷ (cap ÷ 100) ($)Sale costs + remaining debt ($)

What evidence would invalidate the rent-growth or cap-rate assumption?

Checked example

$240,000 scheduled rent − $12,000 vacancy/collection loss − $128,000 operating expenses = $100,000 NOI. At a $2,000,000 price: 5% cap. A $1,200,000 loan at 6.5%, monthly payments and 30-year amortization costs about $91,018 annually. After $10,000 annual reserves: about −$1,018 cash flow. With $900,000 invested: −0.11% cash-on-cash before income taxes.

At exit, $110,000 NOI ÷ 6% = $1,833,333, down 8.3% from the starting $2,000,000 before sale costs. Total NOI must grow 20% to preserve that starting value at a 6% cap.

Original RentalCalcs worksheet. Inputs and calculations here are educational assumptions, not a California valuation or tax estimate. The report contains the source ledger and limitations.