Underwriting accuracy

These cases are regression locks for the Dre1mery underwriting engine. Each expected value is computed by hand from the inputs shown. CI runs every case against the engine on each change; a failure means the engine is producing a wrong answer, not a rounding difference. Percentages are decimals (0.08 = 8 percent). Tolerance is 1e-6 unless stated.

Machine-readable: /underwriting-accuracy.json. Source test: tests/underwrite/golden/knownAccuracyBugs.test.js.

Operating expenses

8 percent management on $2,500 of income

Function: calculateVariableExpenses

Inputs

monthlyIncome: 2500
ops: {"management":0.08}

Expected

monthlyVariableExpenses: 200

2,500 x 0.08 = 200 (not 2, which is the double-divided value).

Operating expenses

Management 8 + maintenance 5 + capEx 5 percent on $2,000 rent, all cash

Function: calculateBasicMetrics

Inputs

propertyType: Single Family
operationType: Buy & Hold
offerType: Cash
purchasePrice: 200000
monthlyRent: 2000
fixedMonthlyExpenses: {"taxes":200,"insurance":100}
debtService: 0
vacancy: 0
ops: {"management":0.08,"maintenance":0.05,"capEx":0.05}

Expected

monthlyVariableOps: 360
monthlyCashFlow: 1340

Variable: 2,000 x (0.08 + 0.05 + 0.05) = 360. Cash flow: 2,000 - 300 fixed - 360 = 1,340.

Operating expenses

At-a-Glance variable ops percentage

Function: computeVariableMonthlyOpsPct

Inputs

ops: {"management":0.08,"maintenance":0.05,"utilitiesPct":0.02,"capEx":0.05,"opEx":0.01}

Expected

variableOpsPct: 0.21

0.08 + 0.05 + 0.02 + 0.05 + 0.01 = 0.21. Decimals are summed, not divided by 100 again.

STR break-even

Short-term rental break-even occupancy and ADR

Function: calculateBreakEvenAnalysisSTR

Inputs

adr: 200
avgNightsPerMonth: 15
fixedMonthly: {"taxes":150}
ops: {"management":0.1,"maintenance":0.05,"capEx":0.05}

Expected

breakEvenOccupancy: 0.03125
breakEvenADR: 6.25

Fixed 150/mo = 5/day. Variable 20 percent of 200 ADR = 40/night. Occupancy = 5 / (200 - 40) = 0.03125. ADR at full occupancy = 5 / (1 - 0.20) = 6.25.

Vacancy

5 percent vacancy on $2,000 gross rent, all cash

Function: calculateBasicMetrics

Inputs

propertyType: Single Family
operationType: Buy & Hold
offerType: Cash
purchasePrice: 200000
monthlyRent: 2000
fixedMonthlyExpenses: {"taxes":200,"insurance":100}
debtService: 0
vacancy: 0.05
ops: {}

Expected

grossPotentialIncome: 2000
monthlyIncome: 1900
vacancyLoss: 100
monthlyCashFlow: 1600
annualCashFlow: 19200

Vacancy loss 2,000 x 0.05 = 100. EGI 1,900. Cash flow 1,900 - 300 = 1,600/mo, 19,200/yr.

Vacancy

Variable expenses charged on post-vacancy income

Function: calculateBasicMetrics

Inputs

propertyType: Single Family
operationType: Buy & Hold
offerType: Cash
purchasePrice: 200000
monthlyRent: 2000
fixedMonthlyExpenses: {"taxes":200,"insurance":100}
debtService: 0
vacancy: 0.05
ops: {"management":0.1}

Expected

monthlyVariableOps: 190
monthlyCashFlow: 1410

EGI 1,900 x 0.10 = 190. Cash flow 1,900 - 300 - 190 = 1,410.

IRR period

Buy 1,000, receive 100/yr for 5 years, sell for 1,000 at year 5

Function: calculateIRR

Inputs

initialInvestment: -1000
cashFlows: [100,100,100,100,100]
saleProceeds: 1000

Expected

irr: 0.1

Par bond identity: a 10 percent coupon redeemed at par yields exactly 10 percent. Discounting the sale one period late gave 8.66 percent.

IRR period

Buy 1,000, no interim cash flow, sell for 1,210 after 2 years

Function: calculateIRR

Inputs

initialInvestment: -1000
cashFlows: [0,0]
saleProceeds: 1210

Expected

irr: 0.1

1,000 x 1.1^2 = 1,210, so IRR = 10 percent.