ROI and Cap Rate — Fast math for NJ investors
By Obiora Okagbue • Fathom Realty • NJ Licensed Realtor #17587224
How I screen deals in minutes
- Start with realistic rent comps and a small vacancy factor.
- Estimate expenses: taxes, insurance, maintenance, utilities (if landlord paid), management.
- Run quick cap rate and cash‑on‑cash to see if it hits your target.
Quick definitions
Cap rate = NOI ÷ Purchase price
Cash‑on‑cash ROI ≈ Annual pre‑tax cash flow ÷ Initial cash invested
Targets I often see in NJ
- Cap rate: 6–8% for stabilized multi‑family; higher if value‑add.
- Cash‑on‑cash: 8–12% depending on leverage and risk.
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