RENT
Income
Determine what the property can realistically generate in monthly rent.
Street Smart Business School • Real Estate
Real estate is a business. Run the numbers before you buy.
Owning property does not automatically mean you are making money.
Learn how to evaluate rent, expenses, financing, cash flow, property condition and acquisition price before committing your money.
Find the income. Understand the expenses. Determine the cash flow. Then determine the price.
Street Smart Real Estate
Do not buy a property because you like the property.
Buy when the property, financing and acquisition price work together as an investment.
COST
Expenses
Account for taxes, insurance, repairs, management, vacancy, reserves and other operating expenses.
FLOW
Cash Flow
Determine what remains after operating expenses and mortgage debt service.
Real estate is not automatically a good investment.
The numbers determine whether
a particular property,
at a particular price,
under a particular financing structure
fits your investment strategy.
Featured Real Estate Curriculum
Section 8 Landlord & Investor School
Learn the Housing Choice Voucher rental process from the landlord and investor perspective.
- How Section 8 works
- Landlord requirements
- Property inspections
- Rent calculation
- SAFMR
- Finding properties
- Cash flow
- Financing
- Tenant screening
SSBS Investor Tool
Reverse-Engineering Property Calculator
Start with the expected monthly rent and work backward into the maximum price the investment can support.
- Enter monthly rent
- Add operating expenses
- Calculate NOI
- Set target cash flow
- Enter financing terms
- Calculate maximum loan
- Calculate maximum purchase price
- Calculate maximum offer price
Reverse-Engineer the Deal
Let the rent determine the price — not the seller.
Instead of starting with an asking price and trying to force the numbers to work, start with the economics.
The SSBS calculator begins with the expected monthly rent, subtracts operating expenses, protects your desired cash flow, converts the remaining income into maximum debt-service capacity, and works backward into a maximum offer price.
The Reverse-Engineering Sequence
1. Monthly Rent
Start with realistic property income.
2. Operating Expenses
Calculate what it costs to operate the property.
3. Net Operating Income
Rent minus operating expenses.
4. Target Cash Flow
Decide what you want to keep each month.
5. Debt-Service Capacity
Determine how much mortgage payment the property can support.
6. Financing
Convert debt service into a maximum loan amount.
7. Acquisition Costs
Subtract rehab, closing, holding and contingency.
Maximum Offer Price
The SSBS Real Estate Process
Evaluate the deal in the right order.
1. Learn the Market
Understand rents,
neighborhoods,
property types
and local demand.
2. Determine Income
Establish a realistic
monthly rent assumption.
3. Determine Expenses
Estimate operating costs
before mortgage payments.
4. Calculate NOI
Determine what remains
before financing.
5. Set Cash Flow
Decide what monthly cash flow
you require.
6. Analyze Financing
Determine the mortgage payment
and loan amount
the property can support.
7. Determine the Price
Work backward
into your maximum acquisition number.
8. Negotiate
Compare your number
to the seller's number
and decide whether a deal exists.
Do not start with the seller's asking price.
Start with the property's income
and work backward
into the price
your investment model can support.
Choose Your Next Step
Start where you are in the deal.
S8
Learn Section 8
Start with the full nine-lesson Section 8 landlord and investor curriculum.
Section 8 School
CASH
Understand Cash Flow
Learn how rent becomes NOI and how NOI becomes investor cash flow.
Cash Flow Lesson
LOAN
Understand Financing
Learn how rate, amortization and loan-to-value affect the price a property can support.
Financing Lesson
MAX
Calculate Maximum Offer
Put the income, expenses, cash flow and financing together to determine your maximum modeled offer price.
Open Calculator
FIND
Find Properties
Learn how to search for properties that fit the investment economics you have established.
Find Properties
TEN
Tenant Screening
Learn why voucher participation does not eliminate the need for responsible tenant screening.
Tenant Screening
Own Your Life
Real estate is one possible tool for building income and ownership.
The goal is not simply to collect properties. The goal is to understand what you own, why you own it, what it produces, what it costs, and whether it moves you closer to greater financial control.
Ownership without understanding can become another liability.
Learn the business.
Learn the numbers.
Learn the risks.
Then decide whether the property belongs in your plan.
Ready to Run a Deal?
Start with the numbers.
If you already have a rent assumption, use the reverse-engineering calculator. If you are new to Section 8, start with the landlord curriculum.