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Underwriting Deals

Analyze a deal financially before making an offer. prei has two underwriting tools: pipeline underwriting (per-property) and the standalone BRRRR calculator.

Two Underwriting Tools

Pipeline Underwriting BRRRR Calculator
Context A property in your pipeline Standalone deal analysis
Where Pipeline detail (/pipeline/<pk>/) /brrrr/
Rent source Property data (VRM / HUD FMR fallback) Manual input
Rehab Optional (part of CoC denominator) Required input
Refinance Not modeled Full refi modeling
Target metric Cap rate threshold → MAO DSCR + cash recycle verdict
Best for Buy-and-hold evaluation BRRRR strategy deals

1. Pipeline Underwriting

When: after a property passes screening, click → Underwriting in the screener to move it to the UNDERWRITING stage, then open its pipeline detail page.

Inputs

From the property record plus your assumptions:

  • Estimated rent (monthly) — from VRM source or HUD FMR fallback
  • Purchase price
  • Property tax (annual) and insurance (annual)
  • Vacancy rate — default 5%
  • Rehab budget
  • Maintenance reserve rate — default 10% of GPR
  • Management fee rate — default 8% of EGI
  • HOA (annual)

Metrics computed

# Metric Formula
1 Gross Potential Rent (GPR) monthly rent × 12
2 Effective Gross Income (EGI) GPR × (1 − vacancy rate)
3 Operating Expenses tax + insurance + (GPR × maint%) + (EGI × mgmt%) + HOA
4 Net Operating Income (NOI) EGI − OpEx
5 Cap Rate NOI / purchase price
6 Cash-on-Cash NOI / (price + rehab) — all-cash baseline
7 Max Allowable Offer (MAO) NOI / target cap rate

Target cap rate & MAO

  • You supply a target cap rate (e.g., 8%).
  • MAO backsolves the maximum price that still hits that cap rate: MAO = NOI / target.
  • If the asking price is above MAO, the deal doesn't meet your return threshold.

Interpretation

  • Cap Rate ≥ target — the deal meets your return bar.
  • Cash-on-Cash — the unlevered return on your all-in cost (price + rehab).
  • MAO — the max price you should offer; negotiate down from here.

2. BRRRR Calculator

The BRRRR (Buy, Rehab, Rent, Refinance, Repeat) calculator is a client-side tool that models the full refi cycle. It is covered in detail in its own guide: Using the BRRRR Calculator.

Inputs (summary)

Purchase price, ARV (required), rehab cost, closing costs %, monthly rent, refinance LTV (default 75%), refi rate/term, and annual operating expenses.

Outputs & verdicts (summary)

Metric / Verdict Condition Meaning
Total Project Cost purchase + rehab + closing All-in capital
Max Refi Loan ARV × LTV Cash-out amount
Cash Left in Deal total cost − max loan Capital still in the deal
🟢 Full Cycle cash left ≤ 0 All capital recycled — ready for next deal
🟡 Partial Recycle cash left ≤ 25% of project cost Most capital free; some remains
🔴 Capital Trap cash left > 25% of project cost Too much capital stuck — renegotiate
DSCR NOI / annual debt service Lender qualification metric

DSCR warning

If DSCR < 1.25, a warning is appended to the verdict banner — most lenders require ≥ 1.25 to qualify the refinance.

Key Differences Recap

Aspect Pipeline Underwriting BRRRR Calculator
Context Property in pipeline Standalone deal analysis
Rent Source Property data (VRM/FMR) Manual input
Rehab Optional field Required input
Refinance Not modeled Full refi modeling
Target Cap rate threshold DSCR + cash recycle
Best For Buy-and-hold evaluation BRRRR strategy deals