Methodology
Every formula PisoMetric uses, with no black boxes. Calculations run in your browser using the data you enter.
Financial engine version: 1.0.0 · Product version: 0.1.0 (2026-10-06)
Base definitions
Acquisition cost = price + purchase taxes and costs + renovation + furnishing + other upfront costs
Upfront capital = acquisition cost + mortgage costs − loan amount
Effective rental income = monthly rent × months rented per year
Operating income = effective rental income + other annual income
Operating expenses = property tax + HOA / building fees + insurance + maintenance + management + utilities + other expenses
Expenses entered monthly are multiplied by 12. All amounts are in the analysis currency and on an annual basis unless otherwise stated. There is no currency conversion.
Purchase taxes and costs
If a verified preset exists for the property’s location, each item is calculated with its own rule (percentage of the price, fixed amount or brackets) and the total replaces the purchase taxes and costs amount. Each preset has an identifier, an effective date, a review date and official sources; the values are indicative and editable. Without a verified preset, the amount is the one you enter. The financial engine knows nothing about countries or taxes.
Gross yield
(monthly rent × 12) / purchase price × 100
This is the conventional definition used in listings and property portals. It does not account for vacancy, expenses or purchase costs.
NOI (net operating income)
NOI = operating income − operating expenses
What the property generates per year before paying the mortgage and before personal taxes.
Net yield
NOI / acquisition cost × 100
The property’s return on everything it costs to acquire, before debt and personal taxes.
Mortgage
Fixed-payment loan calculated with the nominal annual interest rate, not the APR:
r = nominal rate / 100 / 12 · n = years × 12
payment = P · r · (1 + r)^n / ((1 + r)^n − 1) (if r = 0: payment = P / n)
Annual debt service = payment × 12
The loan amount cannot exceed the acquisition cost. Mortgage costs are added to the upfront capital.
Cash flow
Annual cash flow = NOI − annual debt service · Monthly cash flow = annual cash flow / 12
Before personal taxes. Negative cash flow means you have to put money in.
Cash-on-cash
annual cash flow / upfront capital × 100
Only defined if upfront capital is greater than 0.
LTV and LTC
LTV = loan amount / purchase price × 100
LTC = loan amount / acquisition cost × 100
DSCR
DSCR = NOI / annual debt service
How many times NOI covers the mortgage payments. Only defined when there is debt.
Simple payback
upfront capital / annual cash flow
A simple approximation that ignores inflation, appreciation, loan principal repayment, taxes and sale. Only when annual cash flow is positive.
Short-term rental
Occupied nights = available nights × occupancy · Stays = occupied nights / average stay
Accommodation revenue = ADR × occupied nights
Gross revenue = accommodation revenue + cleaning fee charged × stays + other income
Operating expenses = (platform fee + management + taxes you pay) × accommodation revenue + (cleaning + laundry) × stays + supplies × occupied nights + fixed annual costs
NOI = gross revenue − operating expenses · Gross yield = gross revenue / price
The mortgage, cash flow, cash-on-cash, DSCR and payback are calculated the same way as for long-term rental. Break-even occupancy and rate are the values at which annual cash flow would be 0, with all other data unchanged. The sensitivity map varies the rate by ±30% and occupancy by ±20 points.
Goals
Minimum net yield, minimum monthly cash flow, minimum cash-on-cash and maximum upfront capital. Each one is marked as Met, Not met or Cannot be evaluated. They are compared against the exact mathematical value: only floating-point representation error (one part in a billion) is absorbed.
Deal limits
For each variable (price, rent, occupancy, operating expenses and nominal rate), PisoMetric searches for the value beyond which the goals are no longer all met, changing a single variable. It first checks that the outcome changes only once within the range; it then finds the limit by bisection and verifies it with the engine. The limit is stated on the conservative side.
Ranges: price up to 3 times the current value; rent up to 3 times; occupancy from 0 to 12 months; expenses up to 4 times; nominal rate from 0% to 20%. If there is no solution, it says “Not reachable within the analyzed range”. A value is never invented.
Mortgage when simulating other prices
When the price changes, the loan keeps the financed percentage (default) or the amount, depending on the option chosen. A negative loan, or one above the acquisition cost, is never allowed.
Sensitivity map
A grid of 9 × 9 price and rent combinations (±20% around your scenario). Each cell is a full analysis.
Stress tests
- Rent −10%: rent × 0.9.
- One more vacant month: months rented − 1 (minimum 0).
- Expenses +15%: operating expenses × 1.15.
- Nominal rate +1 point: mortgage only.
- Conservative scenario: all at once.
For short-term rental: ADR −10%, occupancy −10 points, costs +15%, fee +5 points, nominal rate +1 point and all at once. These are simulations, not predictions.
Rounding
Internal calculations are not rounded between steps. Values are rounded only for display. If a metric does not exist mathematically, “Not available” is shown; it is never turned into zero.
What version 0.1.0 does not cover
- Personal income taxes or deductions.
- Automatic tax calculation without verified reference values.
- Appreciation, future sale price or taxes on sale.
- IRR or discounted cash flows.
- Currency conversion.
- Future regulatory changes or the authorization of short-term rentals.
PisoMetric provides calculations, simulations and financial models based on the data you enter. It is not financial, tax, legal or investment advice, and it does not approve mortgages or appraise properties. Check the costs, taxes and conditions that apply to your case.