Finance category

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Tenant Improvement ROI Calculator

Landlord-funded tenant improvements (TI) only make economic sense if the present value of incremental rent exceeds the upfront cost. This calculator computes the NPV, simple cash yield, and payback on TI investment — letting landlords decide whether to fund the build-out, ask the tenant to amortize it, or walk from the deal.

Total TI cost

Annual rent lift from TI

Above market base case

Lease term (years)

Discount rate %

TI NPV

-$77,459

PV of incremental rent

$442,541

Simple cash yield on TI

16.35%

Payback (years)

6.12

How the math works

TI ROI compares the present value of incremental rent (above what landlord would have earned without the build-out) to the upfront TI cost. Positive NPV at the landlord's cost of capital means the TI is value-creating; negative NPV means the deal is being subsidized.

$520K TI yielding $85K incremental rent over 7 years at 8% discount delivers ~$443K PV — a NPV loss of ~$77K. Either negotiate higher rent, longer term, or smaller TI to make the deal accretive.

Editorial noteMaintained by EveryCalc - Reviewed June 2026

EveryCalc calculators are designed for fast, practical estimates with transparent inputs and no required account. We use plain formulas, visible assumptions, and related tools so visitors can check the result from more than one angle.

Results are informational only. For financial, tax, legal, medical, construction, or other high-impact decisions, verify the output against primary sources or a qualified professional.

Learn more about our review process on the EveryCalc methodology page.

How this calculator works

What this page estimates

This Tenant Improvement ROI Calculator is built to give a quick, browser-based estimate for tenant improvement roi. Landlord-funded tenant improvements (TI) only make economic sense if the present value of incremental rent exceeds the upfront cost. This calculator computes the NPV, simple cash yield, and payback on TI investment — letting landlords decide whether to fund the build-out, ask the tenant to amortize it, or walk from the deal. The inputs stay on the page during normal use, and the result should be treated as an estimate for planning, comparison, or education rather than professional advice.

Calculation approach

The calculator applies the standard relationship implied by the inputs, then formats the answer so it can be checked and reused. For finance tools, the most important step is using consistent units, rates, time periods, and assumptions before comparing the result with another calculator or outside quote.

Example workflow

For example, start with a realistic value you already know, change one input at a time, and watch how the answer moves. That makes it easier to tell whether the result is being driven by the main amount, the rate, the time period, or a unit conversion.

Practical checks

Use current, real-world numbers when the result affects money, health, tax, or legal decisions.
Run a low, base, and high case when the inputs are estimates.
Check the related calculators below when the next decision depends on a different assumption.

How to interpret the tenant improvement roi result

Best use

Use the result as a planning number for comparing payments, rates, returns, tax reserves, or cash-flow choices before you request a quote or make a commitment.

Cross-check

Compare the answer with the contract, lender estimate, tax form, brokerage statement, payroll record, or invoice that will control the real-world outcome.

Watch for

Do not rely on a single optimistic rate, return, or fee assumption. Money pages work best when you run low, base, and high cases and keep professional advice separate from the estimate.

This page belongs to the Finance calculator library, so the answer should be read in the context of the decision you are modeling rather than as a universal rule.

Before relying on this tenant improvement roi estimate

Most calculator mistakes come from the inputs, not the arithmetic. Use this short audit before you reuse the answer in a spreadsheet, quote, application, or important conversation.

Confirm source numbers

Match balances, rates, fees, taxes, income, and payment dates against the lender quote, payroll record, tax form, statement, invoice, or contract.

Separate cash flow from total cost

A lower monthly payment can still cost more over time if fees, interest, taxes, or a longer term are hidden in the structure.

Run conservative cases

Test at least one higher-cost or lower-return case before using the output for a purchase, refinance, investment, loan, or tax decision.

Rerun this page when the rate, price, term, fee, tax rule, income, expense, or expected holding period changes.

How to Use

Enter total TI cost (landlord's cash outlay).
Enter incremental annual rent — what TI delivers above the no-TI base case.
Enter lease term and landlord discount rate.
Read NPV, PV of rent stream, simple cash yield, and payback period.

Frequently Asked Questions

What discount rate should I use?

Use landlord's weighted cost of capital — typically 7-10% for institutional, 10-15% for entrepreneurial. Above 10% TI rarely pays unless lease term is 7+ years.

What's incremental rent?

The rent uplift attributable to the TI vs the same lease without TI. If tenant insists on TI, the offset is they'd otherwise demand free rent — value the gap.

Negative NPV — should I do the deal?

Sometimes yes — to fill vacancy, retain a long-tenured tenant, or attract a credit anchor that lifts surrounding rents. The NPV captures only direct economics.