Rental Underwriting — after-tax return model

Annualized after-tax return · 7-yr hold i

–%

—

Underwriting ratios · year 1

Cash-on-cash return i–

Cap rate i–

Debt-service coverage (DSCR) i–

Break-even occupancy i–

Real monthly cash flow i

–

year 1, pre-tax

After-tax cash flow i

–

year 1

Equity multiple i

–

at sale, after tax

Total profit i

–

after-tax, full hold

The deal

Purchase & financing

Income

Operating costs

Growth & appreciation

Taxes & depreciation

Exit

Year-one cash flow

The capex reserve is cash set aside for roofs, HVAC, and turnover. It lowers real cash flow but isn't deductible the year you set it aside, so it doesn't reduce that year's tax bill.

Over the hold i

–

Methodology. Straight-line depreciation over 27.5 years on the building portion of basis (land isn't depreciable). Passive losses follow the $25k active-participation allowance, phased out between $100k and $150k MAGI, with the balance suspended and released at sale. Depreciation recapture is taxed at your entered recapture rate (25% cap), and the remaining gain at your capital-gains rate. The capex reserve is set aside as real cash each year; whatever share you don't spend is returned to you at sale. Spent reserve is treated as an expense and isn't added to cost basis, which keeps the exit tax conservative. This is a modeling tool, not tax advice. The numbers are only as good as your inputs, and a CPA should sign off before you buy.