Instant Offer Calculator

Determine what price to offer for a property

Using the Calculator

The Instant Offer Calculator is a powerful tool designed to quickly evaluate property deals by calculating the ideal price you should offer based on key financial metrics such as Net Operating Income (NOI) and Capitalization Rate (Cap Rate). By following the steps outlined below, you can use this tool effectively to make informed decisions when analyzing real estate investments.

Step-by-Step Instructions

1. Enter the Number of Units

  • Start by adjusting the slider or entering the total number of units in the property.
  • Include all rentable units in the property. If you’re evaluating a multi-family property with 16 units, for example, input “16” or adjust the slider to match.
  • Why It’s Important: The number of units directly impacts the gross rental income and other calculations.

2. Input Market Rent per Unit

  • Enter the fair market rent charged per unit, per month, in USD.
  • Be realistic and use current market rates. For example, if similar units in the area rent for $2,000 per month, input “2000.”
  • Why It’s Important: Accurate rent figures ensure that your gross income calculation reflects actual market conditions.

3. Add Other Income (as a Percentage)

  • Input additional income as a percentage of the annual gross income. This could include revenue from:
  • Application fees
  • Parking fees
  • Pet fees
  • Utilities
  • Trash services
  • Storage rental fees

  • Example: If additional income contributes 3.25% to your total gross income, input “3.25%.”
  • Why It’s Important: Capturing all income streams ensures the NOI reflects the property’s total earning potential.

4. Specify the Occupancy Rate (as a Percentage)

  • Enter the expected occupancy percentage for the property.
  • This figure reflects how much of the property you expect to be rented out. For example, if you estimate that 90% of units will be occupied at any given time, input “90%.”
  • Why It’s Important: Occupancy rates impact total income and account for potential vacancy losses.

5. Add Expense Percentage (as a Percentage)

  • Enter the property’s operating expenses as a percentage of the gross annual income.
  • Expenses typically include maintenance, property management, insurance, taxes, utilities, and other recurring costs. If expenses amount to 40% of the gross income, input “40%.”
  • Why It’s Important: Accurate expense estimates allow you to calculate a realistic NOI and avoid overestimating profitability.

6. Define the Capitalization Rate (Cap Rate)

  • Input the cap rate you’re willing to accept for the deal.
  • The cap rate reflects your desired return on investment based on the property’s income. For example, a 6% cap rate means you expect a 6% annual return on the purchase price. Adjust this based on market trends, property risk, and your investment goals.
  • Why It’s Important: The cap rate directly influences the maximum price you should offer for the property.

Understanding the Results

Net Operating Income (NOI)

  • Once you’ve entered the above inputs, the calculator will display the Net Operating Income. This is the property’s annual income after deducting expenses but before accounting for debt service and taxes.
  • Why It’s Important: NOI is a key measure of a property’s profitability and is used to calculate the offer price.

Price to Offer for the Deal

  • Based on the inputs, the calculator will suggest the maximum price you should offer for the property.
  • How It’s Calculated: Net Operating Income ÷ Cap Rate = Offer Price
  • Example: If the NOI is $214,099 and the cap rate is 6%, the price to offer would be $3,568,320.
  • Why It’s Important: This value ensures you don’t overpay for a property, aligning your offer with your desired return on investment.


Tips for Getting Accurate Results

Use Reliable Data

Ensure your inputs, such as market rent, expenses, and occupancy rate, are based on actual data or credible projections.

Research the Market

Understand the average cap rates for properties in the area and adjust the calculator accordingly. Cap rates vary by property type and market conditions.

Account for Future Changes

Consider potential rent increases, expense changes, or shifts in occupancy when entering your data.

Experiment with Scenarios

Use the calculator to test various scenarios by adjusting inputs like occupancy and expenses. This will help you understand the property’s potential under different conditions.

Cross-Check Results

Compare the suggested offer price to recent comparable sales in the area to ensure your offer aligns with market values.

Why Use This Calculator?

The Instant Offer Calculator simplifies underwriting by providing quick, accurate calculations. It is especially useful for real estate investors who need to evaluate multiple deals efficiently without relying on complex spreadsheets. By following this guide, you can confidently determine the right price to offer for any property, ensuring you meet your investment goals while minimizing risks.