Frontiers · Residential Properties · Model methodology
Transparent mechanics. Explicit boundaries.
ILLUSTRATIVE · USD · PRE-TAX
Residential model methodology
Inspect monthly rental and project cash flows, debt schedules, exit valuation and return conventions.
Rental engine
| Measure | Definition |
|---|---|
| Potential monthly revenue | Units × monthly rent; or units × available annual nights ÷ 12 × nightly rate |
| Collected revenue | Potential revenue × economic occupancy |
| NOI | Collected revenue − variable operating charges − fixed property expenses |
| Equity operating cash flow | NOI − capital spending − vehicle administration − principal and interest |
| Initial equity | Purchase + acquisition costs + initial refurbishment + loan fee − purchase loan |
| Terminal equity receipt | Gross property value − selling costs − remaining debt; allocated by ownership |
| Cash-on-cash | First-year equity operating cash flow ÷ initial equity |
| DSCR | First-year NOI ÷ first-year principal and interest |
| Break-even base occupancy | Base occupancy yielding zero first-year equity operating cash flow |
Project engine
| Measure | Definition |
|---|---|
| Works budget | Base works × (1 + contingency) |
| Initial equity | Acquisition price + acquisition costs + fee on total loan commitment − purchase loan |
| Monthly cash flow | Works debt draw − works − cash-paid interest − holding costs − administration |
| Interest convention | Start-of-month works draw included in that month’s interest |
| Project cost | Purchase + acquisition costs + all works + loan fee + interest + holding + admin + selling costs |
| Margin on sales | (Gross sale value − project cost) ÷ gross sale value |
| Timing | Uniform works during build, followed by sales delay; one final sale |
Return calculations
NPV: sum of monthly investor cash flows discounted by (1 + annual hurdle)month ÷ 12. Initial equity is month zero. IRR: the annual rate at which that NPV equals zero. The numerical search spans roughly −99.99% to +99,999,900%; multiple detected roots suppress a single IRR. Finite scanning can miss closely spaced or tangential roots — inspect cash flows and NPV when the pattern is unconventional.
Net-flow equity multiple: total positive monthly investor net cash flows ÷ absolute total negative monthly net flows. Same-month costs and receipts are netted, including the exit month, so it can understate intra-month funding needs. “Net-flow contributions” follows the same convention.
Growth: rent/nightly price and fixed expenses escalate smoothly each month at their annual-equivalent rates. Variable costs follow collected revenue. Capital spending and administration escalate with fixed expenses. Seasonal occupancy factors are 0.8, 0.8, 0.9, 1.0, 1.0, 1.1, 1.2, 1.2, 0.9, 0.9, 1.0 and 1.2, beginning in January.
Scope and next-stage underwriting
All returns are pre-tax, nominal and in one currency (USD). No inflation adjustment, FX conversion, rent caps, investor-level fee waterfall, transaction-specific tax, refinance, default or reserve account is simulated. All positive cash is distributed and all negative cash is funded pro rata, including a sale shortfall; actual legal recourse can differ.
Development has no phased unit sales, pre-sale receipts, rent, retention, rolled-up interest or procurement schedule. Rental debt is a fixed-rate fully amortising loan; the selected hold does not imply lender maturity approval. Oceanview and Oceanfront flags apply no automatic adjustment.
Evidence labels: BIS price aggregates and cited rules are Observed; presets and your entries are Assumed; every output is Modelled. Inputs stay in this browser tab and are never sent to Rwannie.
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