NCF & the financial model

This page is the deep technical reference for the pro-forma's financial structure. For the short version, see Net Cash Flow (NCF) formula.

The full layout

Each year (Year 1 through Year 10) has the same vertical structure:

Income
  Gross Potential Rent           (GPR)
  Other Income                   (OI)
  Vacancy & Concessions          (V&C)         [negative]
= Effective Gross Income         (EGI)

Operating Expenses
  Property Taxes                 (PT)
  Insurance
  Utilities
  Repairs & Maintenance
  Payroll
  Marketing & Promo
  Management Fee                 (% of EGI)
= Total Operating Expenses       (OpEx)

= Net Operating Income            (NOI)        = EGI - OpEx

Capital Items
  Capex
  Tenant Improvements (TI)       [commercial]
  Leasing Commissions (LC)       [commercial]
  One-time inflows               [if any, +]
= Total Capital Items

= Net Cash Flow Before Debt      (NCFBD)       = NOI + Capital Items

Debt Service
  Principal
  Interest
= Total Debt Service             (DS)

= Net Cash Flow                  (NCF)         = NOI + Capital Items - DS

For exits, Year 10 has additional rows:

Reversion
  Exit NOI                       (typically Year 11 NOI projection)
  Exit Cap Rate                  (assumption)
  Gross Sale Price               = Exit NOI / Exit Cap Rate
  Selling Costs                  (assumption % of GSP)
  Loan Payoff
= Net Sale Proceeds

NCF in Year 10 includes the net sale proceeds in the line above NCF or in a separate "Reversion" line, depending on display preference.

The NCF formula

NCF = NOI + Capital Items - Debt Service

NCF is the line you use for IRR and equity-multiple math. Unlevered Cash Flow is NOI + Capital Items (the line above debt service).

Where management fee fits

Management fee is in OpEx, not below it. This is a deliberate choice — most institutional underwriters include mgmt fee in NOI rather than treating it as a below-the-line allocation, and our model follows that convention. If you need it below the line for an institutional template, override mgmt fee to 0 in the pro-forma and add it as a custom expense outside the standard line items.

Vacancy: physical vs economic

Relm's "Vacancy & Concessions" line is economic vacancy — the dollar value of GPR not collected, including both physical vacancy and concessions/credit loss. If you need to separate those, use the "Vacancy assumption" panel, which exposes physical and credit-loss as distinct inputs that are summed into the V&C line.

Per-unit benchmarks

Operating expense lines that don't have a P&L source default to per-unit-per-year benchmarks for the asset class and submarket. You'll see those flagged with an Assumed badge:

R&M Year 1: $680/unit/yr [Assumed: garden multifamily, vintage 1990s, Sun Belt]

Override individually if you have better information.

Excel formulas

When Relm writes the model into an Excel export, derived cells use formulas that reference the assumptions sheet. The formulas are wrapped in IFERROR(..., "") so empty or error states render blank. For example:

EGI_Y4 = IFERROR(GPR_Y4 + OI_Y4 - VC_Y4, "")
NOI_Y4 = IFERROR(EGI_Y4 - OpEx_Y4, "")
NCF_Y4 = IFERROR(NOI_Y4 + CapitalItems_Y4 - DS_Y4, "")

This pattern is preserved on push-back from Excel — if you add cells in the same style, they'll round-trip cleanly.

Returns calculation

• IRR — equity IRR over the hold period; uses XIRR against acquisition (Year 0) and NCF + reversion (Year 10).
• Equity Multiple — total NCF + net sale proceeds, divided by initial equity.
• DSCR — NOI / Debt Service, computed each year.
• Cash-on-cash — NCF / initial equity, computed each year.

What's next

• Net Cash Flow formula
• Generate with AI
• Manual edits & assumptions