How is the Sales Price calculated using the CAP Rate in TheAnalyst® PRO Investment Analysis Tool?

In TheAnalyst® PRO, the projected Sales Price of an income-producing property is calculated based on the Capitalization Rate (CAP Rate) you enter and the Net Operating Income (NOI) of the year following the sale. This is a standard method used in commercial real estate valuation to estimate the resale value of a property.

The CAP Rate is applied to the next year’s projected NOI—specifically, the year following the sale. For instance, if you’re selling the property at the end of Year 5, the system uses the Year 6 NOI in the sales price calculation. The formula is straightforward:

Sales Price = Next Year’s NOI / CAP Rate

As an example, if the Year 6 NOI is $100,000 and the entered CAP Rate is 7%, the raw sales price would be calculated as:

$100,000 ÷ 0.07 = $1,428,571.43

To keep reports clean and professional, TheAnalyst® PRO automatically rounds the calculated Sales Price to the nearest $1,000. In this example, the final reported sales price would be $1,429,000.

This method ensures your valuation reflects the income potential of the property at the time of sale, aligning with industry norms for investment analysis while maintaining clarity and consistency in presentation.