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Foundational Logic
1
property.
3
scenarios.
10
years.
Scenario Trajectories (Y1–Y10)
Active Matrix
Base Case
Downside
Custom
Underwriting is not prediction. It is a structured test of whether a property can meet your return and coverage requirements under stated assumptions.
10-Year Horizon
Analytical Ledger
Each index isolates a distinct dimension of performance, leverage, and operational viability.
01
Cap Rate = NOI / Property Value
NOI divided by property value or acquisition basis, used to view unlevered operating yield. It does not include financing.
Unlevered performance benchmark independent of capital structure.
02
CoC = Annual Pre-Tax Cash Flow / Cash Invested
Annual pre-tax cash flow divided by cash invested, used to assess the return on deployed cash. It depends heavily on financing and the completeness of expenses.
Sensitive to debt terms, initial equity outlay, and reserve allocations.
03
NOI = Effective Rental Income − OpEx
Effective rental income less operating expenses, before debt service, income taxes, depreciation, and capital structure.
Fundamental measure of operational earning power at the physical asset level.
04
DSCR = NOI / Annual Debt Service
NOI divided by annual debt service, used to assess operating coverage of principal and interest.
Primary solvency cushion required by institutional and commercial lenders.
Important convention note: Metric definitions can vary by lender and context. Confirm the conventions required for your analysis.
Input Discipline Hierarchy
A financial model can only be as credible as the hierarchy of evidence supporting it. We separate primary property realities from broader market benchmarks and capital terms.
Tier 01 · Baseline
1
Purchase basis, unit details, current rent, lease terms, taxes, insurance, and known repairs.
Direct Empirical Observation
Tier 02 · Market Context
2
Achievable rent, stabilized vacancy, management cost, growth assumptions, and exit conditions.
Sub-market Comp Benchmarking
Tier 03 · Debt & Terms
3
Rate, amortization, term, loan amount, points, fees, and reserves.
Lender Term Sheet Verification
Stress-Test Philosophy
“The goal is not to manufacture a passing result. It is to locate the assumptions carrying the decision.”
A base case shows what happens if your stated assumptions hold. A downside case asks where the investment becomes uncomfortable. A custom case lets you examine a market-specific concern.
Var 01
Test achievable income below the initial expectation.
Top-Line Compression
Var 02
Model slower leasing or turnover.
Occupancy Friction
Var 03
Allow for insurance, taxes, maintenance, utilities, and management pressure.
Margin Squeeze
Var 04
Examine payment sensitivity where terms may change.
Debt Service Burden
Var 05
Test lower appreciation, higher selling costs, or a different hold period.
Terminal Realization
Compliance & Governance Notice
Real Estate Underwriter Pro is an underwriting aid. It is not an appraisal, financial advice, legal or tax advice, loan approval, or a guarantee of investment performance. Fictional sample calculations are provided for illustration only. Local property taxes, insurance, management fees, repairs, rents, vacancy, financing, and other market variables must be verified against the subject property and its sub-market before acquisition.
Consider qualified real estate, lending, tax, legal, insurance, and inspection professionals where appropriate.