Rental projections are a powerful tool for investors — but only if used realistically. Too many deals look good on paper because projections are inflated, incomplete, or based on weak comps. This guide explains how to build projections that match how lenders evaluate rental income and how to avoid common mistakes.
1. Use Projections for Deal Screening Only
Projections help you filter deals quickly.
But lenders never use them for approval.
Once you pursue a deal, the real numbers must come from:
- Signed leases
- 1007 market rent
- Property management statements
2. Base Projections on Leased Comparables
The best comps share:
- Same bedroom count
- Similar property type
- Similar finishes
- Same neighborhood tier
- Recent leasing history
Avoid using optimistic active listings.
3. Build Both Optimistic and Conservative Scenarios
Smart investors never rely on a single projection.
Run two sets of numbers:
- Top-of-market rent
- Appraiser-level market rent
If the deal fails the conservative test, walk away.
4. Factor in Vacancy and Operating Expenses
Accurate projections include:
- 5–10% vacancy
- Repairs allowance
- CapEx
- Insurance
- Taxes
- Management fees
Ignoring expenses destroys cash flow.
5. Use Stress-Testing to Check DSCR
Reduce rent by 10–20%.
Increase taxes or insurance.
Recalculate DSCR.
If the deal survives the stress test, it’s solid.
6. Short-Term Rental Projections Require Multiple Views
For STRs, use:
- Low season averages
- Mid season demand
- Peak season projections
Cross-check data using multiple tools — not just one platform.
Final Thoughts
Rental projections are powerful when used correctly. They help investors filter deals, predict cash flow, and understand risk — but only when based on real comps, realistic expenses, and conservative assumptions.
Strong projections protect your capital and keep your portfolio healthy.
Need help structuring your loan file or analyzing your deal? Reach out on;
WhatsApp: +1 448-230-7488.
phone no : +1-201-680-0991
Email: annie@insightflending.com
