How the Model Works

Every deal on the next three pages is a real, currently-listed or recently-transacted property run through the same pro-forma. Here’s exactly how to read one.

The five-line pro-forma

Each model reduces to five lines:

  Gross annual rent            (the projection the listing/PM advertises)
– Operating costs             (management + tax + insurance + everything else)
= Net Operating Income (NOI)   (the property's true earning power, unlevered)
– Debt service                (the mortgage — the part rent struggles to cover)
= Annual cash flow            (positive = it pays for itself)

The two numbers that decide everything

• ERP (Estimated Rental Performance) = gross annual rent ÷ price. The OBX industry’s headline yardstick. 10% is “pretty darn good”; most homes are 5–8%. HIGH
• Unlevered yield = NOI ÷ price. This is ERP after the cost stack — usually ~40–55% lower than ERP, because roughly half the gross is eaten before the mortgage.

Then the leverage test: compare unlevered yield to the mortgage constant (annual mortgage payment ÷ loan balance, ≈ 8.0% at a 7% 30-year rate). If yield < constant, you’re in negative leverage and cost-neutrality requires equity, not a clever loan. This one comparison predicts the verdict.

Fixed assumptions across all models

Assumption	Value	Basis
Mortgage rate	7.0%, 30-yr fixed	July 2026: 6.45% baseline + investment/DSCR spread HIGH
Management fee	18% of gross	OBX full-service norm 15–22% HIGH
Property tax	market-specific % of price	Duck OF 0.712%, Corolla 0.70%, Nags Head ~0.42–0.53% HIGH
Insurance (3 policies)	$10–15k oceanfront, less inland	Homeowners + wind/hail + flood MED
Other opex	pool/spa + utilities + maintenance & storm reserve + HOA	scaled to house size MED

Honest caveats — read before trusting any single number

• Gross-rent figures are advertised projections (or booked-to-date), not guaranteed actuals. Listing agents and PMs are incentivized to quote optimistically. Model treats them at face value; haircut them 10–20% for your own underwriting.
• We model tax on list price, but NC taxes assessed value (often below list). This makes our tax line slightly conservative (too high) — a small margin of safety.
• Some richest-data comps are recent sold properties, not currently active — flagged inline. They’re included because they carry a complete, verified specs + projection + tax record.
• Down-payment scenarios shown are 20% (typical) and 40% (equity-heavy), plus the computed exact down payment to reach cost-neutral.

Now the deals: Duck → · Corolla → · Nags Head → · or the interactive calculator →.