Commercial real estate underwriting: a buyer's reference

Underwriting model gives a wrong IRR after a rent roll change: the Reddit question, answered

16 September 2026

When IRR moves the wrong way after a rent roll edit, audit the mechanics of the workbook before you re-argue the assumptions. Check in this order: a constant pasted over a formula, sum ranges that stopped short of the new rows, a date vector that no longer lines up with its cash flow vector, a flipped sign, a per period rate read as an annual one, vacancy deducted twice, lease-up timing that did not move, an unresolved debt sizing loop, and an exit value built on a stale NOI.

Why this page has the word Reddit in its title

People add reddit to a search like this because they want an answer from somebody with nothing to sell. So, the conflict first: Altyst publishes this page and sells commercial real estate underwriting software. We did not read Reddit to write it, and no post, user or thread is quoted or characterised here. The straight answer follows anyway, for use in your own spreadsheet, with every third party claim linked to the page we read it on.

Reproduce the break before you debug it

Save a copy, undo the rent roll edit in it, and note four numbers: IRR, year one NOI, equity multiple, exit value. Redo the edit one change at a time and watch them. Whichever number jumps first, or refuses to move, names the broken block. If nothing moves at all, check the workbook is not sitting in manual calculation mode.

The nine causes, in the order worth checking

1. A constant sits where a formula used to be

Somebody typed a number over a formula to make a total tie, and that cell now ignores your edit. Excel's error checking has a rule for this, flagging a cell where the formula does not match the pattern of other formulas near it. A separate rule flags numbers stored as text, which Microsoft notes typically occurs when data is imported from other sources, and a rent roll pasted out of a management system is exactly that. Switch to show formulas view and read the calculation block for constants.

2. The ranges did not extend to the new rows

You appended units at the bottom and the totals above still sum the old range. Microsoft's error checking covers this case too, warning that a formula may not automatically include references to data you insert between the original range and the cell that contains the formula. Repair every aggregation that reads the rent roll, not just the visible total: scheduled rent, unit count, occupied square feet, turnover counts, expenses quoted per unit.

3. The dates and the cash flows drifted apart

A dated IRR needs its two vectors to correspond one to one. A plain count mismatch announces itself, because Microsoft states that if values and dates contain a different number of values, XIRR returns an error rather than a number. The silent version is the one to hunt. Both ranges still hold the same number of cells, but the amounts have shifted a period against the dates, so every flow is discounted from the wrong day and the function hands back a figure that looks perfectly reasonable. Compare the first cell, the last cell and the count of each range. The periodic function has its own silent case: Microsoft states that text, logical values and empty cells inside the array are ignored, so a blank period shortens the timeline instead of erroring. Leave a zero, not a blank.

4. A sign convention flipped

Equity out is negative, distributions positive. Microsoft states the periodic series must contain at least one positive value and one negative value, states the same of XIRR, and Google documents the same requirement for XIRR in Sheets. A series that ends up entirely positive therefore errors rather than quietly returning a wrong number. What lies is a single line flipped inside an otherwise valid series, refinance proceeds entered negative being one worth checking. Sum the cash flow row: it should equal total distributions less equity invested.

5. Per period and annual are mixed

Microsoft states the cash flows must occur at regular intervals, such as monthly or annually. The rate comes back in the period of the data, so a monthly series returns a monthly rate. Annualise by compounding, (1 + r)^12 - 1, not by multiplying by twelve. Check too that an annual growth assumption was not dragged across monthly columns.

6. Vacancy is deducted twice

Gross potential rent is the total scheduled rent at market or asking rent for every unit, vacant ones included. It is not unit count times average in place rent. Build it from occupied units only and then apply a vacancy factor on top, and the same empty space is charged twice. Walk the stack once and charge each item at one level only: gross potential rent, less loss to lease, less vacancy, concessions and credit loss, plus other income, giving effective gross income, less operating expenses, giving NOI. NOI excludes debt service, and replacement reserves sit above or below it depending on the convention, so pick one and hold it across the model.

7. The rent starts before it could have started

Marking a vacant unit leased changes when cash arrives, not only how much. Confirm the lease start date, downtime, free rent months, and whether tenant improvements and leasing commissions are charged in the period the work happens. A rent roll that absorbs faster while the timing tab stays put is an easy pair to miss.

8. Debt sizing is circular and the loop did not settle

Size a loan to a coverage or debt yield target and the model refers to itself: loan sets debt service, debt service sets coverage, coverage sets loan. Microsoft describes iteration as the repeated recalculation of a worksheet until a specific numeric condition is met, warns that circular references can iterate indefinitely, and puts the stopping point in the Maximum Iterations and Maximum Change boxes. Check the output by hand: DSCR is NOI divided by annual debt service, and debt yield is NOI divided by the loan amount.

9. The exit never heard about the rent roll

The sale arrives as one large cash flow at the end of the hold, so an exit value that is hardcoded, or keyed to an NOI row that did not move, absorbs a large rent change without showing it. Trace the exit value back to the NOI it capitalises and confirm which year that is. Then check the two numbers beside it: selling costs, which should recompute off the new sale price, and the loan payoff, which is the balance outstanding in the exit year and does not follow NOI unless the loan was sized to a coverage or debt yield target.

Symptom to suspect

What you are seeingLook here firstQuick test
IRR barely movedExit value, or a stale rangeDid year one NOI move? Did the exit value move?
IRR moved, equity multiple did notDates and timingThe cash flow row total should be unchanged
Nothing moved at allManual calculation, or a hardcoded IRR cellRecalculate, then check the cell holds a formula
IRR improved when you raised vacancyThe sign on the vacancy lineEffective gross income should fall, not rise
NOI is below the rent roll you builtVacancy deducted twice, or gross potential rent built off occupied units onlyRebuild gross potential rent at market for every unit, then apply vacancy once
An error, or an absurd IRRSigns, near zero equity, a count mismatch between values and datesOne negative and one positive value, equal counts, one period convention

The checklist

  1. Copy the file and note IRR, year one NOI, equity multiple and exit value first.
  2. Confirm the workbook recalculates automatically.
  3. Count the rent roll rows and confirm every total reads all of them.
  4. Show formulas across the calculation block and hunt for constants.
  5. Confirm the cash flow and date vectors share a count, a start and an end.
  6. Confirm one negative and one positive cash flow, with equity as the negative.
  7. Rebuild gross potential rent for all units, vacant included, then apply vacancy once.
  8. Check lease start, downtime, free rent, TI and leasing commissions on every unit you touched.
  9. Verify DSCR as NOI over annual debt service, and debt yield as NOI over loan amount.
  10. Trace the exit value to the NOI year it capitalises, then confirm the loan payoff is the balance outstanding in that year.

Trace Precedents draws a tracer arrow to each cell that directly provides data to the active cell, and Trace Dependents draws one to each cell dependent on it, which is the quickest way to learn whether your exit value is still connected to your rent roll. One more check that costs nothing: equity multiple, total distributions divided by equity invested, ignores timing entirely, so reading it against IRR separates a magnitude bug from a date bug.

Does purpose-built software avoid this

Part of it, and it is worth being precise about which part. Causes 1, 2 and 3 are spreadsheet failures: each one needs a cell you can overwrite or a range that can fall short of its own data. Rebuild the same deal somewhere that has neither and those three stop being available to you. The rest survive the move. A lease start date entered a quarter early is wrong in any engine, vacancy applied on top of a unit already shown as empty is wrong in any engine, and an exit capitalising the wrong year is wrong in any engine. What changes is that you are auditing assumptions instead of auditing wiring.

Altus Group states that ARGUS Enterprise is now available as part of the ARGUS Intelligence Platform, and that every tiered, asset based subscription to that platform includes ARGUS Enterprise alongside ARGUS Asset Manager, ARGUS Portfolio Manager and ARGUS Assist. It publishes no price figure, saying pricing is flexible, tiered and scales with your business.

Altyst, which publishes this page, extracts figures from an offering memorandum, rent roll, T-12 or pasted listing link and builds an editable model through to IRR, DSCR, equity multiple and exit. The AI does the extraction and a deterministic engine does the arithmetic, so the same inputs give the same numbers. Plans start at $12 a month for five deals, with no free tier and no trial, and it cannot open or produce ARGUS files. The calculators at altyst.ai/tools and the ten year multifamily model at altyst.ai/tools/multifamily-model are free and need no account.

FAQ

I raised rents a lot and IRR barely moved. Why?

Either the totals feeding the cash flow miss the rows you changed, or the exit value is not built on the NOI you changed. Check year one NOI first: if it moved and IRR did not, the fault is downstream of NOI, in the exit or the debt block.

Should I use the periodic IRR function or the dated one?

Use the periodic function only when the cash flows fall at regular intervals, which Microsoft gives as the condition for it, and remember its result is a rate per period. Use the dated function when closing, funding and sale dates are irregular. Either way, hold one convention across the model.

My IRR returns an error instead of a number.

Start with signs. Microsoft states that the periodic function and XIRR both need at least one positive and one negative value in the series, and Google documents the same requirement in Sheets. Then check the counts, because Microsoft states XIRR errors when values and dates contain a different number of values. Then confirm the equity outflow actually sits inside the range you passed.

IRR changed but the equity multiple did not. Which is wrong?

Probably neither. Equity multiple is total distributions divided by equity invested, so it ignores timing. If total cash is unchanged and IRR moved, you changed when money arrives: a lease start date, a downtime assumption, or a shifted date vector.

Is it safe to delete the old rent roll rows and paste in new ones?

Not into the live model. Deleting rows takes the formulas in them with you, and pasting carries values, formats and sometimes numbers stored as text into cells that used to calculate. Paste into a staging area instead, match on unit number, and let the model's formulas read from there.

How do I stop this happening again?

Keep a control block at the top of the model showing unit count, occupied units, gross potential rent, year one NOI, DSCR and equity multiple, and keep it in view while you edit. An edit that breaks one of those shows you the break where you made it, rather than at the end of the chain.

Sources

Pages read while writing this, on 16 September 2026. Nothing here came from Reddit.