Cap rate (capitalization rate)
A property's net operating income divided by its purchase price, expressed as a percentage. It reflects the unleveraged annual yield. Lower cap rates mean higher prices relative to income (trophy assets); higher cap rates mean lower prices (riskier or higher-yield assets).
Skyline example: Manhattan multifamily cap rates in 2026 typically range 5.5%-6.5% for free-market and 6.5%-8.5% for rent-stabilized inventory.
NYC cap rate calculator →NOI (Net Operating Income)
A property's revenue minus operating expenses, before debt service and capital expenditures. The standard top-line metric for commercial real estate underwriting and the numerator in most valuation calculations.
Skyline example: Skyline's NOI calculator differs from generic CRE NOI tools by incorporating NYC-specific opex normalization for rent-stabilized vs. free-market multifamily and the local real-estate-tax stack.
NYC NOI calculator →GRM (Gross Rent Multiplier)
A property's price divided by its annual gross rental income. A quick screening metric that ignores expenses, vacancy, and financing; lower GRMs generally indicate cheaper pricing relative to income.
In practice: GRM is a fast first filter, but a low GRM on a rent-stabilized building can be misleading once HSTPA-constrained upside and high opex are factored in — which is why cap rate, not GRM, drives final pricing.
NYC cap rate calculator →Price per unit (price/door)
For multifamily, the total price divided by the number of apartment units (also called price per door). A standard benchmark for residential acquisitions, less meaningful where unit sizes vary widely.
In practice: Price-per-door comparisons across Upper East Side, Williamsburg, and Lower East Side multifamily only hold up when adjusted for unit mix and the share of rent-stabilized units.
NYC multifamily investment property →DSCR (Debt Service Coverage Ratio)
Net operating income divided by annual debt service. Lenders require a minimum DSCR (commonly 1.20-1.25x) to ensure income comfortably covers loan payments; below 1.0x means the property does not generate enough income to service its debt.
In practice: When rates rose in 2023-2024, many NYC office and rent-stabilized loans failed to refinance because higher debt service pushed DSCR below lender minimums.
NYC commercial RE investment guide →LTV (Loan-to-Value)
The loan amount divided by the property's appraised value or purchase price, expressed as a percentage. A primary measure of leverage and lender risk; commercial LTVs commonly run 55-75% depending on asset type and market.
In practice: Conservative LTVs on NYC commercial debt mean buyers must bring substantial equity — one reason confidential, well-capitalized off-market buyers close more reliably than the broad market.
NYC commercial RE investment guide →LTC (Loan-to-Cost)
The loan amount divided by total project cost (acquisition plus construction or renovation), used primarily for development and value-add deals. It measures leverage against actual dollars invested rather than appraised value.
In practice: A 467-m office-to-residential conversion is underwritten on LTC because the value-add construction cost — not the as-is value — drives the capital stack.
Sell or convert? (467-m) →IRR (Internal Rate of Return)
The discount rate at which the net present value of all projected cash flows (including the sale) equals zero — a time-weighted measure of total return. It accounts for the timing and size of cash flows but does not, by itself, convey deal size or absolute profit.
In practice: Two NYC deals can show the same IRR while returning very different total dollars, which is why investors pair IRR with the equity multiple.
NYC commercial RE investment guide →Equity multiple
Total cash distributions received divided by total equity invested (e.g., 2.0x means doubling invested equity). Unlike IRR, it ignores timing and simply measures total dollars returned per dollar invested.
In practice: A long-hold NYC multifamily deal may produce a modest IRR but a strong equity multiple, because steady distributions and principal paydown compound over time.
NYC commercial RE investment guide →Cash-on-cash return
Annual pre-tax cash flow divided by the total equity invested, expressed as a percentage. A leveraged, single-year measure of current income yield on equity that ignores appreciation, principal paydown, and the eventual sale.
In practice: In a low-cap-rate Manhattan market, cash-on-cash returns can be thin in early years, with most of the return coming from appreciation and eventual disposition.
NYC commercial RE investment guide →Debt yield
Net operating income divided by the loan amount, expressed as a percentage — the return a lender would earn if it foreclosed and took the property. Independent of interest rate, amortization, and appraised value, it is a pure measure of leverage risk; lenders often require a minimum of 8-10%.
In practice: Debt yield became the binding constraint on many NYC refinancings in the high-rate environment, even where LTV looked acceptable.
NYC commercial RE investment guide →Going-in vs. exit cap rate
The going-in (entry) cap rate is based on year-one NOI at acquisition; the exit (reversion or terminal) cap rate is the assumed cap rate used to value the property at sale. Underwriters often assume an exit cap equal to or modestly higher than the going-in rate; cap-rate expansion reduces projected returns.
In practice: Assuming a flat exit cap rate in a rising-rate market is the single most common way NYC underwriting overstates projected returns.
NYC cap rate calculator →Replacement cost
The estimated cost to construct an equivalent building today, including land, hard and soft costs, and developer profit. Buying meaningfully below replacement cost is viewed as a margin of safety because it deters new competing supply.
In practice: Distressed NYC office trading well below replacement cost is exactly what makes residential conversion pencil — the buyer acquires structure and location for less than it would cost to build.
Sell or convert? (467-m) →EGI (Effective Gross Income)
Potential gross income (gross potential rent plus other income such as parking, laundry, or fees) less vacancy and credit/collection losses. EGI is the realistically collectible income from which operating expenses are subtracted to arrive at NOI.
In practice: Normalizing EGI for realistic vacancy is essential on NYC rent-stabilized buildings, where stated rents and collectible rents can diverge.
NYC NOI calculator →Operating expense ratio
Total operating expenses divided by effective gross income, expressed as a percentage — a measure of operating efficiency. Higher ratios indicate a larger share of income consumed by expenses.
In practice: NYC rent-stabilized buildings often run high operating expense ratios because regulated rents cannot keep pace with rising taxes, fuel, and insurance.
NYC NOI calculator →Breakeven occupancy
The occupancy (or rent-collection) level at which a property's income exactly covers operating expenses plus debt service. The cushion between breakeven and stabilized occupancy shows how much vacancy a property can absorb before it cannot cover its obligations.
In practice: A thin gap between breakeven and actual occupancy is the warning sign that pushes many over-levered NYC office owners toward a sale.
NYC commercial RE investment guide →