SSBS Section 8 Real Estate Tool

Reverse-Engineer Your Maximum Property Price

Start with the rent the property can realistically generate, subtract the operating expenses, protect your target cash flow, then work backward into the maximum price you can afford to pay.

Let the rent determine the price — not the seller.

Before You Calculate

Use the rent you reasonably expect the PHA to approve.

A published PHA payment standard is useful for underwriting, but it is not automatically the rent the property will receive. The PHA must approve the unit and determine that the proposed rent is reasonable.

Best practice: Enter the expected or approved monthly rent to owner when you know it. If you only have the published payment standard, use it as a preliminary underwriting assumption and verify the final amount with the local PHA.

1. Starting Rent Begin with the housing income assumption.

PHA Payment Standard Reference

$ /mo

Reference only. This is not automatically the approved rent.

Expected / Approved Monthly Rent to Owner

$ /mo

Use the contract rent you expect the PHA to approve.

Expected PHA HAP Portion

$ /mo

Optional planning field.

Expected Tenant Portion

$ /mo

HAP + tenant portion should generally equal rent to owner.

2. Operating Expenses These expenses are deducted before mortgage payments.

Vacancy / Collection Allowance

Property Management

Repairs & Maintenance Reserve

CapEx Reserve

Property Taxes

$ /yr

Insurance

$ /yr

Owner-Paid Utilities

$ /mo

HOA

$ /mo

Lawn / Exterior

$ /mo

Admin / Misc.

$ /mo

3. Investor Targets & Financing Define your required cash flow and financing assumptions.

Target Monthly Cash Flow

$ /mo

Loan Interest Rate

Loan Amortization

years

Loan-to-Value

Example: 80% LTV = 20% equity/down payment.

4. Acquisition & Make-Ready Costs These amounts are backed out of the maximum purchase price.

Rehab / Make-Ready

Closing Costs

Holding Costs

Contingency Reserve

Your Reverse-Engineered Number

Maximum Offer Price

Maximum modeled acquisition offer after rehab, closing, holding and contingency costs.

Gross Monthly Rent $0 Monthly rent to owner used in underwriting.

Operating Expenses $0 Before mortgage payments.

Monthly NOI $0 Rent minus modeled operating expenses.

Max Debt Service $0 NOI minus target cash flow.

Maximum Loan $0 Supported by modeled monthly debt service.

Maximum Purchase Price $0 Maximum loan divided by assumed LTV.

          
            Annual NOI
          
            $0
          
            Monthly NOI × 12.

          
            Cash Flow After Debt
          
            $0
          
            Should equal your target if the offer is at the modeled maximum.

Vacancy / Collection $0

Property Management $0

Repairs Reserve $0

CapEx Reserve $0

Taxes $0

Insurance $0

Owner Utilities $0

HOA $0

Lawn / Exterior $0

Admin / Misc. $0

Total Monthly Expenses $0

Underwriting reminder: This is an educational acquisition model. Actual PHA-approved rent, utility allowances, property expenses, lender underwriting, interest rates, taxes, insurance, closing costs and repair costs can differ.

How the Calculator Works

Reverse-engineer the deal in four steps.

Gross Rent

Start with the expected monthly rent to owner.

Monthly NOI

Gross Rent − Operating Expenses = Monthly NOI.

Maximum Debt Service

Monthly NOI − Target Cash Flow = Maximum Monthly Debt Service.

Maximum Offer

Back into the loan, purchase price and finally the maximum offer.

Street Smart Rule If the numbers do not support the seller's price, the property is too expensive for your investment criteria. Change the price, change the terms, improve the economics, or walk away.

Verify Before You Buy

The calculator is only as good as the inputs.

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PHA Rent

Confirm the applicable payment standard, rent reasonableness and expected rent to owner.

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Utilities

Determine which utilities are owner-paid and which are tenant-paid.

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Property Costs

Verify taxes, insurance, repairs, HOA and property-management expenses.

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Financing

Use real lender terms before making a binding purchase decision.