# @derekvickers885 on Instagram

- **Type:** Image
- **Original URL:** https://www.instagram.com/p/DcMbxBpFKPV
- **Gondola URL:** https://gondola.cc/posts/69282992-derekvickers885-instagram
- **Thumbnail:** https://img.gondola.cc/tr:w-,h-,fo-auto/postThumbnails/068bdfcec9.jpg
- **Posted:** 2026-08-18T20:07:27.000+00:00
- **Account Owner:** Derek Vickers (@derekvickers885) — https://gondola.cc/derekvickers885

## Caption

What Happens If NOI Drops 10%?

Most real estate deals are underwritten around a base case.

But investments don't operate in a spreadsheet.

Income can fall. Expenses can rise. Occupancy can soften. Repairs can come sooner than expected.

The question isn't whether the original assumptions look good.

It's whether the deal still works when they don't.

Consider a simple example:

NOI: $1,000,000
Annual debt service: $700,000
DSCR: 1.43x

Now reduce NOI by 10%.

NOI falls to $900,000.

Debt service doesn't change.

But DSCR falls to 1.29x.

That means less cash flow cushion and less flexibility to absorb another setback.

And the more leverage you have, the smaller that margin for error becomes.

This is why we don't look at leverage, DSCR, reserves, or NOI assumptions in isolation.

We stress-test the business.

What happens if occupancy drops?

What happens if expenses are higher than projected?

What happens if refinancing is more expensive?

What happens if the business plan takes longer to execute?

The goal isn't to build a model that works perfectly when every assumption is right.

It's to structure an investment with enough financial flexibility to keep executing when some assumptions are wrong.

Because over a full market cycle, durable returns aren't just about upside.

They're also about having enough room to handle the downside.

When you evaluate a real estate deal, how much of an NOI decline do you stress-test for?

#RealEstate #RealEstateInvesting #CommercialRealEstate #PrivateEquity #MobileHomeParks #Underwriting #CashFlow #Investing

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## Tags

underwriting, cashflow, privateequity, realestate, commercialrealestate, investing, realestateinvesting, mobilehomeparks

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