Investor guide
From Gross Rent to Real Cash Flow
Gross rent is the top line, not profit. Start with all recurring property income, subtract a realistic vacancy allowance and operating expenses such as taxes, insurance, repairs, management, owner-paid utilities, lawn care and other recurring costs. The amount left before financing is net operating income, or NOI. Debt service comes after NOI. What remains after debt service is a simplified pre-tax cash-flow estimate. Large future items such as roofs, HVAC systems, parking lots or unit turns can make a property that looks profitable on paper much less attractive, so serious underwriting should include capital reserves and property-specific due diligence.
Use the number as a screen, not a verdict
Good underwriting is a process of replacing assumptions with verified facts. Save your first-pass estimate, then update it as leases, tax records, insurance quotes, lender terms, appraisals and inspection findings arrive.