Methodology — version DTNW-2026.04.1
The output is only as credible as the math behind it. We publish all twenty-three methodologies, the formula each one uses, and the threshold we judge it against. Read it cover to cover, or jump to the metric your lender cares about.
Category — Rules of thumb
Fast filters experienced investors use to triage listings before opening a spreadsheet.
Monthly gross rent should equal at least 1% of the all-in purchase price. A fast filter for whether a property merits deeper underwriting.
When to useFirst-pass screening on listings before pulling expense data.
An aggressive cousin of the 1% rule, common in lower-cost markets. Few markets clear it today.
Operating expenses, excluding debt service, will average roughly 50% of gross rents over a full holding period.
For flips and BRRRR exits: maximum allowable offer equals 70% of after-repair value, less rehab.
Each unit should produce at least $100 of monthly cash flow after all expenses and debt service.
GRM
Purchase price divided by annual gross rent. A market-relative valuation lens used by appraisers.
Category — Investor metrics
The seven calculations institutional underwriters depend on, including the one your lender cares about most.
Cap rate
Net operating income as a percentage of purchase price. The closest thing to a market-comparable yield.
Annual pre-tax cash flow divided by the cash actually invested. The investor-equity yield.
NOI
Income from operations minus all operating expenses, before debt service and capital expenditures.
DSCR
NOI divided by annual debt service. The metric most lenders underwrite to. Below 1.20 typically fails.
Total ROI
Sum of cash flow, principal paydown, and assumed appreciation, expressed as a return on cash invested.
Internal rate of return over a five-year hold, including a modeled sale at exit. Solved iteratively via Newton-Raphson.
How much of gross rent is consumed by expenses plus debt service. Lender comfort zone is below 85%.
Category — Strategy
Different exits demand different math. We model BRRRR, flip, house hack, and short-term rental projections discretely.
Buy, rehab, rent, refinance, repeat. Models capital recovery at the cash-out refinance and the resulting infinite-return potential.
Models gross profit, ROI, and annualized return on a renovate-and-resell exit with carrying costs.
Owner-occupies one unit, rents the others. Models effective housing cost and FHA financing leverage.
Models a short-term rental P&L using occupancy and ADR assumptions, accounting for cleaning, platform fees, and seasonality.
Category — Stress testing
Most calculators show one happy-path number. We re-run the deal under vacancy, rate, rent, and CapEx shocks.
Re-runs the model at 10%, 15%, 20%, and 25% vacancy to find the point at which cash flow goes negative.
Re-prices the loan at +1%, +2%, and +3% above the assumed rate. Surfaces refinance and ARM exposure.
Models cash flow under 5%, 10%, and 15% rent declines. The stress most investors fail to model at all.
Drops a $10K, $25K, and $50K capital expense onto year one. Tests the deal's resilience to a real-world surprise.
Category — Comparative
Every deal competes with the S&P, Treasuries, and REITs. We benchmark explicitly so you see the hurdle rate.
Benchmarks the deal against equivalent capital deployed into the S&P 500, a high-yield savings account, ten-year Treasuries, and a public REIT index.
A 0-100 weighted score across the eight load-bearing metrics, returned with a letter grade and the metrics that pulled it up or down.
Composite score
No single metric is decisive. We weight the eight load-bearing ones, normalize to a 0-100 scale, and translate to a letter grade.
| Metric | Weight |
|---|---|
| Cash-on-cash return | 20% |
| Cap rate | 15% |
| DSCR | 15% |
| $100 per door | 10% |
| 1% rule | 10% |
| Break-even ratio | 10% |
| Five-year IRR | 10% |
| Stress-test resilience | 10% |
| Total | 100% |
Now that you know what is in the model, see what comes out of it.