Cap Rate, NOI & DSCR Calculator for Vernon Investors

Cap rate and NOI calculator

Investors price commercial property on the income it produces. Enter a property's rents and expenses to see its net operating income, cap rate, what it is worth at the cap rate you want, and whether a lender's coverage test will pass.

By Sean Phillips, REALTOR®Coldwell Banker Executives RealtyUpdated September 2026

Calculator

NOI, cap rate and DSCR

Enter the gross annual rent.

The default figures illustrate the maths only. They are not Vernon cap rates or rents.

The formulas, in plain words

Net operating income (NOI): Gross income, minus an allowance for vacancy and bad debt, minus operating expenses. It leaves out mortgage payments, income tax and one-time capital spending. NOI measures the property, not the owner's financing.
Cap rate: NOI divided by price. A $1,000,000 building with $70,000 of NOI trades at a 7% cap. Lower cap rates mean higher prices for the same income, usually because the income is seen as safer or growing.
Value at a target cap rate: NOI divided by the cap rate you want. If you need a 7.5% return and the NOI is $70,000, you can pay about $933,000.
Debt service coverage ratio (DSCR): NOI divided by annual mortgage payments. Lenders use it to size loans; many want 1.2× or more on commercial property. CMHC's MLI Select program for rental buildings uses a lower minimum of about 1.1.
Cash-on-cash return: Cash flow after mortgage payments divided by the cash you put in. It ignores principal paydown and appreciation.

Using it in Vernon

Three things make cap-rate analysis tricky in a market Vernon's size.

Few sales. The North Okanagan recorded 54 commercial sales worth $17.9 million from January to August 2026, across every property type from motels to industrial bays. That is not enough volume to publish a meaningful "Vernon cap rate". Comparable sales have to be read one by one, and Sean can pull them for you.
Expense recovery varies. Two buildings at the same price and rent can have very different NOI depending on how well the leases recover property tax, insurance and CAM. Vernon's 9.34% business-class tax increase in 2026 hit landlords with gross leases directly.
Rates move. The Bank of Canada policy rate is 2.25% (held on 2 September 2026). Cap rates respond to borrowing costs with a lag.

Always rebuild the seller's NOI yourself: add a realistic vacancy allowance, a management fee even if the owner self-manages, and a structural reserve, and check each lease's expiry and renewal terms. Short remaining terms reduce value.

Specialty assets. Cap rates for cannabis facilities and other special-purpose buildings follow different logic. See Sean's cannabis and specialty property site, or for BC-wide investment guides, Commercial Real Estate Group.

Investment property alerts

Get new North Okanagan commercial and investment listings by email, including multi-tenant and mixed-use buildings.

Get current comps before you sign anything

No one publishes a reliable vacancy or lease rate for Vernon, so the numbers that matter come from recent deals. Sean Phillips started his career in commercial real estate and can pull sold and leased comparables, check a property's zone against your use, and tell you what a landlord or seller is likely to accept. Straight answers, no obligation.