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Back-of-the-napkin commercial real estate underwriting, in seconds.
5 Second Model · back-of-the-napkin underwriting
Rental Property
Residential. Does it cash flow after everything, or does it just look like it does?
This screens a residential rental the way it actually operates: property tax from a millage rate and assessed value rather than a guess, insurance, vacancy, maintenance, management and the mortgage. It reports monthly cash flow, cash-on-cash, cap rate, DSCR and the rent at which you break even, then projects the hold with rent and expense growth running at different rates — because insurance and reassessed taxes have outrun rents in most markets.
Monthly cash flow
--
Where the rent goes, per month
Every dollar of rent, and where it goes
Each line as a share of gross scheduled rent
The screening numbers
| Assessed value | -- |
| Property tax at that millage | -- |
| Cash flow per year | -- |
| Net operating income | -- |
| Cap rate | -- |
| Cash-on-cash return | -- |
| Total cash in | -- |
| DSCR | -- |
| Break-even rent | -- |
If you hold it the full period
| Value at exit | -- |
| Equity at exit | -- |
| Net sale proceeds | -- |
| Levered IRR | -- |
| Equity multiple | -- |
| Net present value | -- |
Common questions
- Does the 1% rule still work?
- It has been close to impossible to hit in most US markets since 2021, so treat a miss as a prompt to check the other numbers rather than an automatic pass.
- What is the 50% rule?
- That operating expenses eat roughly half of gross rent before the mortgage. If your inputs come in far under that, you have probably forgotten capital expenditure.
- Why grow expenses faster than rent?
- Because they have. A pro forma that grows both at the same rate quietly manufactures returns. If cash flow is thin today and expenses compound faster, the projection will show you the year it turns negative.