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Methodology

How we estimate cash flow

We start from rent supported by signed leases or comparable listings, subtract a vacancy allowance, subtract every operating expense including management and capital reserves, then subtract debt service. Where an input is unverified we mark it as an assumption and lower the confidence rather than presenting it as a fact.

What this is

What it is
The documented method behind the cash flow figure shown in a Property Intelligence brief.
Who it is for
Investors who want to know whether a projection can be trusted, and why.
The problem it solves
Most rental projections are seller pro formas with the inconvenient expenses removed. A number without a method is a marketing claim.

What the method requires

  • Rent evidence

    Signed leases where available; otherwise comparable active and closed rentals in the same submarket, adjusted for unit size and condition.

  • Verified tax bill

    The county record for the parcel, plus any reassessment likely on sale.

  • Insurance

    A quote or a documented current premium, priced against the actual structure, roof age and location.

  • Condition findings

    Inspection reports and documented observations, which drive both maintenance and capital reserve levels.

The method, step by step

  1. 01

    Establish gross rent

    Use lease evidence first, comparable rentals second. Never a seller pro forma on its own.

  2. 02

    Apply a vacancy allowance

    Set from local turnover, typically 5% to 8%, and stated explicitly in the brief.

  3. 03

    Subtract operating expenses

    Taxes, insurance, management at market rate, routine maintenance, owner-paid utilities and HOA dues.

  4. 04

    Fund capital reserves

    Reserve against the actual remaining life of the roof, heating, cooling and major systems found in the condition record.

  5. 05

    Subtract debt service

    Using the financing terms provided, or a stated market assumption when none are.

  6. 06

    Grade and disclose

    Every line is labeled verified, documented or assumed, and the confidence reflects how many are assumed.

What we will not do

  • We do not present an assumed rent as a verified rent.
  • We do not omit capital reserves to make cash flow look positive.
  • When rent evidence is thin, we say so and lower confidence rather than picking a middle number.

Questions about this method

How does Analyze Any Property calculate rental cash flow?

Gross rent from lease or comparable evidence, less vacancy, less all operating expenses including management and capital reserves, less debt service. Every input is labeled verified, documented or assumed.

Do you include capital reserves in cash flow?

Yes. Reserves are set against the remaining life of the roof and major systems recorded in the condition evidence, not as a flat percentage.

What happens if rent data is unavailable?

We state the gap explicitly, present the range the available evidence supports, and reduce the confidence on the recommendation.

What to read next

Rental Property CalculatorCalculatorCash Flow and Cap Rate CalculatorCalculatorHow to analyze a rental propertyGuideWill this property cash flow?GuideHow we estimate cap rateMethodologyHow confidence is calculatedMethodology

See this method applied to one address

Property Intelligence™ runs this method against verified records, the documents you upload and professional review — then states a recommendation, its confidence, and exactly what is still missing.

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