FAQ: How is Net Rental Cash Flow (Subject Property) Calculated?

Q: What is subject property net rental cash flow in Charlie?

A: Subject property net rental cash flow is the amount of rental income from a property—after factoring in ownership, occupancy, and expenses—that Charlie uses to determine how much the rental income supports or offsets your loan qualification.

It helps Charlie assess whether the rental income is contributing positively or negatively to the loan application.

Q: How does Charlie calculate net rental cash flow?

A: The calculation depends on the property’s occupancy type, rental income status, and the documentation type provided. Here’s how Charlie works through it:

1. No Rental Income or Unknown Rental Income:

• If rental income is marked as No or Unknown,

  • Net rental cash flow = NULL (blank)

  • Charlie skips the calculation.

2. For Primary Residences (With Rental Income):

If:

• Occupancy type = Primary

• Rental income = Yes

• Documentation = Tax return, lease agreement, or market rent

Calculation:

Net rental cash flow = Gross rent × Occupancy rate × Ownership %

Note: Even if the occupancy rate or ownership % is left blank, Charlie still runs the calculation (blank doesn’t mean zero!).

3. For Second Homes or Investment Properties (Tax Return):

If:

• Occupancy type = Second home or investment

• Rental income = Yes

• Documentation = Tax return

Calculation:

Net rental cash flow = Gross rental income – Property expenses (proposed)

4. For Second Homes or Investment Properties (Lease Agreement or Market Rent):

If:

• Occupancy type = Second home or investment

• Rental income = Yes

• Documentation = Lease agreement or market rent

Calculation:

Net rental cash flow = Gross rent × Occupancy rate × Ownership % – Property expenses (proposed)

Q: How does Charlie know if the cash flow is positive or negative?

• Positive cash flow: When net rental cash flow is zero or greater.

• Negative cash flow: When net rental cash flow is less than zero.

Q: What happens if I enter a gross rent amount?

For ALL property types:

• If you enter a gross rent amount, Charlie uses the calculated net rental cash flow for liabilities instead of the individual liability expenses on the property.

• This prevents double-counting expenses in your debt-to-income (DTI) calculation.