How UpsideIQ Underwrites
UpsideIQ underwrites commercial real estate the way an institutional investment committee would: it restates every deal on a true, reserves- and vacancy-adjusted basis, grades it against the return and risk targets you set — with institutional benchmarks as the fallback — and shows the full math so you can audit every number. No black box, no marketing cap rate. This page lays out the conventions behind every analysis.
1. We underwrite to true economics, not the broker's headline.
Every deal is restated on a reserves- and vacancy-adjusted basis, so UpsideIQ surfaces the true cap rate right alongside the seller's marketing number — the broker headline never stands alone. The gap between the two is usually the difference between a pitch and reality. See the full mechanic in the broker cap vs. true cap guide.
2. Pre-reserves NOI for value, post-reserves NOI for returns.
The going-in cap rate and valuation are computed on NOI before replacement reserves — because that's how the market quotes and trades, so comparisons stay apples-to-apples — and entry and exit are reconciled on the same basis. Cash-flow returns (IRR, equity multiple, cash-on-cash) always use NOI after reserves, because reserves are real cash that leaves the account. The default replacement reserve is 5% of gross potential rent for multifamily and $0.15 per square foot for industrial, and reserves are treated as fully consumed — we do not assume you recover unspent reserves at sale, which keeps the return honest rather than flattered. Why this matters is walked in the replacement reserves guide.
3. Graded against your targets — with an institutional fallback.
Set your own hurdles in your profile — minimum cap rate, minimum DSCR, target IRR, target cash-on-cash, and price-to-value — and each factor is graded on how the deal performs against your threshold, not a generic benchmark. Leave any blank and that factor falls back to our institutional benchmark, so a deal is never left ungraded. Location is always scored on market fundamentals. The result is a letter grade (A ≥ 85 / B 75–84 / C 65–74 / D 55–64 / F < 55) with a full six-factor sub-breakdown — and the report tells you which factors were measured against your targets versus the institutional default.
4. Coverage and financing tested honestly.
DSCR is lease-aware — a tight-but-covered ratio is read differently when income is contractually locked by a long-term NNN lease — with explicit handling when coverage falls below 1.0, the point most underwrites gloss over: a deal that does not cover its debt is never dressed up. Financing is modeled both interest-only and amortizing (P&I) so you see the real levered picture, not just the rosy interest-only year.
5. Built to spreadsheet parity.
The engine is built to match a canonical institutional Excel underwriting model — a full multi-year pro forma, detailed income and expense treatment, and a complete ten-year hold-period projection — so the output stands up to a CFA's review, not just a quick screen.
6. Asset-class-native engines.
Multifamily and industrial each run on their own dedicated engine, and industrial outdoor storage (IOS) is underwritten on its own land-yield logic — priced on yield on the land rather than building income — not forced into a one-size-fits-all template. Go deeper on the underwriting hub.
7. AI judgment plus deterministic flags.
Every report pairs a written qualitative read of the deal's strengths and risks with deterministic quantitative quick-flags on the numbers — so you get both reasoned analysis and hard, repeatable checks that fire the same way every time.
8. You can audit all of it.
The full report shows the complete financial pro forma down to levered cash flow, exportable as an investor-ready PDF. Nothing is hidden behind a score — see a sample report or try the free calculators.
Frequently asked questions
What's the difference between broker cap rate and true cap rate?
The broker cap rate divides the seller's headline NOI — usually before replacement reserves and on an optimistic vacancy — by the asking price. The true cap rate restates NOI on a reserves- and vacancy-adjusted basis, so it reflects the yield you would actually keep. UpsideIQ computes and shows both, and the gap between them is usually the difference between the pitch and reality.
How is the grade decided?
Each deal is scored across six factors — price vs. value, cap rate, cash-on-cash, DSCR, IRR, and location — and graded on letter bands (A is 85+, B is 75–84, C is 65–74, D is 55–64, F is below 55). The first five are graded against the targets you set in your profile — minimum cap rate, minimum DSCR, target IRR, target cash-on-cash, and price-to-value — and any you leave blank fall back to our institutional benchmark, so a deal is never left ungraded. Location is always scored on market fundamentals. Every factor's sub-score is shown, and the report flags which factors were measured against your targets versus the institutional default.
Can I see the full math?
Yes. The full report shows the complete multi-year pro forma down to levered cash flow — income and expense detail, financing both interest-only and amortizing, and the full hold-period projection — exportable as an investor-ready PDF. Nothing is hidden behind a score.
Underwrite your own deal →
Tell UpsideIQ your investment criteria once — every deal gets analyzed, graded, and flagged against YOUR targets, not a generic score.