Figuring Out the Cap Rate you Desire on an Investment Property

Cash on Cash Return Required 20.00%

Down Payment % 25.00%

Loan Payment % 75.00%

Down Payment $375,000.00

Loan Amount $1,125,000.00

Loan Interest Rate 8.00%

Loan Term (in months) 300

Asking Price $1,500,000.00

Monthly Payment based on Asking Price $8,682.93

Annual Payment based on Asking Price $104,195.19

Mortgage Constant (Annual Pmt / Loan Amount) 9.26%

Debt Constant (LTV % X Mortgage Constant) 6.95%

Equity Constant (Down Pmt % X Cash on Cash Return %) 5.00%

Cap Rate Required (Debt Constant + Equity Constant) 11.95%

Net Operating Income $180,000.00

Desired Purchase Price (NOI / Cap Rate) $1,506,736.87

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