Methodology

Two calculators that disagree about a definition will produce two different answers from identical inputs. This page states exactly what every figure on this site means, so the arithmetic can be checked and reconciled against a spreadsheet, an appraisal, or a lender's worksheet.

Last updated November 13, 2026 · NoiMath

Units and rounding

• Currency is US dollars. Inputs may have cents; display rounds to whole dollars at or above $100.
• Percentages are entered as numbers: 5 means 5%, and is divided by 100 internally.
• All maths runs in double precision. Rounding happens only at render time.
• A dash (—) means the metric is undefined for the inputs given — DSCR on an all-cash purchase, for example. It never means zero and never means infinity.

Net operating income

NOI = (Gross potential rent − Vacancy loss) − Operating expenses

We follow the Appraisal Institute definition used in the income approach. Operating expenses include management, maintenance and repairs, property tax, insurance, HOA dues and any utilities paid by the owner. They exclude debt service, capital expenditure, depreciation and income tax.

Capital expenditure is excluded from NOI on purpose. Lenders underwrite DSCR against NOI before capex, and an owner's cash flow is a different question. Every tool that shows cash flow subtracts a capex reserve as a separate line, so the two are never mixed.

Percentage-based expenses

Management, maintenance and capex reserves are calculated as a percentage of gross potential rent, not effective gross income. This is the common convention in quick underwriting. If your spreadsheet uses effective gross income as the base, your figures will be slightly lower.

Vacancy

Vacancy is applied to gross potential rent and represents both physical vacancy and uncollected rent. Enter scheduled rent at full occupancy — entering already-collected rent and a vacancy percentage double-counts the loss.

Debt service

r = annual rate ÷ 12
M = P × r × (1 + r)^n ÷ ((1 + r)^n − 1)

Interest-only loans use P × r and never amortise. Zero-rate loans fall back to straight-line principal. Annual debt service is the monthly payment multiplied by twelve.

DSCR and debt capacity

DSCR = NOI ÷ Annual debt service
Stress DSCR = (NOI − Capex reserves) ÷ Annual debt service

DSCR uses NOI without the capex reserve, matching how DSCR lenders underwrite. The stress version subtracts the reserve, because a deal that only clears its covenant before reserves is thinner than it looks. Both are labelled; neither is a qualification decision.

The DSCR calculator also runs the formula backwards. At a target DSCR, the debt service the property supports is NOI ÷ target; dividing by twelve gives a monthly payment, and the loan principal is the present value of that payment at the entered rate and term. An interest-only loan divides the monthly payment by the monthly rate instead.

Cap rate, gross rent multiplier, cash-on-cash

• Cap rate = NOI ÷ purchase price. Unlevered.
• Gross rent multiplier = purchase price ÷ gross annual rent, before vacancy.
• Cash-on-cash = annual pre-tax cash flow ÷ total cash invested, where total cash invested is down payment + closing costs + rehab budget.
• Operating expense ratio = operating expenses ÷ effective gross income.
• Break-even occupancy = (operating expenses + debt service) ÷ gross potential rent. The occupancy at which cash flow reaches zero.
• 1% rule check = monthly rent ÷ purchase price. A heuristic, not a standard.

BRRRR

All-in cost = Purchase + Closing costs + Rehab
New loan = ARV × Refinance LTV
Cash left in the deal = All-in cost − New loan + Refinance costs

A cash-left result at or below zero means the refinance returned the entire investment. In that case post-refinance cash-on-cash has no denominator and is shown as ∞ with an explanation, not as a fabricated number.

Fix and flip

Total cost = Purchase + Purchase closing + Rehab + Holding + Financing + Selling
Profit = ARV − Total cost
ROI = Profit ÷ (Purchase + Purchase closing + Rehab + Financing)

Annualised ROI is ROI × 12 ÷ holding months, a simple extrapolation rather than a compounded return. The break-even ARV is the price at which profit is zero: costs before selling divided by one minus the selling-cost percentage.

Maximum allowable offer

Rule offer = ARV × rule% − Rehab
Target-profit offer = ARV − Rehab − Target profit − Selling costs − Holding costs

The 70% rule is a screening shortcut, not a valuation. The target-profit version states the same question with the costs written out; the two offers differ whenever the profit the rule implies differs from the target the user enters.

Projections, IRR and equity multiple

Multi-year projections grow rent and expenses independently, then apply the vacancy assumption to the grown rent. Property value grows at the appreciation rate entered. The loan balance comes from the amortisation schedule, not an approximation. Equity is property value minus loan balance.

IRR is solved by bisection on the net present value curve, not Newton's method, because Newton can fail to converge on real-estate cash-flow shapes. Where no sign change exists in the series, the tool reports that IRR is undefined rather than displaying a misleading figure. Equity multiple is total distributions divided by total cash invested.

Sensitivity

The sensitivity grid re-runs the full model at five purchase prices (90% to 110% of the entered price) and five rent levels (90% to 110%). Each cell is monthly cash flow for that combination. The centre cell is the deal exactly as entered and is highlighted.

Deal analyzer

The deal analyzer combines the metrics above from one input set. The overview cards, waterfall, projection, IRR and sensitivity grid all call the same derivation, so a number shown in one panel cannot disagree with the same number in another. It is an arithmetic composition, not a separate model.

How the numbers are tested

The calculation layer is covered by automated tests: the documented golden example is a snapshot contract with a ±0.01 tolerance, and each formula has boundary cases (zero price, zero interest, all cash, negative NOI, interest-only loans, zero or negative cash left). The tests and the expected values are part of the repository, so a change in a formula has to be a deliberate change to the contract rather than an accident.

Defaults

Each calculator ships with a realistic default property so the page shows a complete analysis before you type anything. Defaults are illustrative, not recommendations, and they differ between tools so that no two pages demonstrate the same deal. Values are rounded to convenient inputs; the arithmetic uses them exactly as displayed.

Known simplifications

These tools model a single property in steady state. They do not model rent-control ordinances, phased renovation, partnership waterfalls, cost segregation, state-specific transfer taxes, or lender overlays. They are arithmetic, not advice.