Stacking the Deal Greenbuild
Primer
A ten-minute primer for people who design buildings

See your building the way the bank does.

Every green strategy you already know has a line in a spreadsheet. Learn the three numbers that decide whether a building gets built, then take the spreadsheet apart with design.

The building
units
Stories
over a podium
Cost to build
Interest rate
Lesson 1 of 6 · Uses

Where the money goes

Before anyone talks about rent or returns, the building is a pile of costs. Underwriters sort that pile into five buckets, then divide by the number of units.

Total development cost · per unit
Underwriter's eye

Land, foundation and roof are fixed. Everything in between scales with each unit you add. Hold that thought: it is the whole trick behind the fourth move.

Lesson 2 of 6 · Sources

Who pays for it

Two kinds of money build a building. They want different things.

Debt · the bank
Cheaper. Impatient: the same payment every month, full building or not, for 30 years.
Equity · the investors
Expensive. Patient: paid last, only from what is left, and only if it is there.
Underwriter's eye

The bank does not lend 70% because it is generous. It lends what the building's income can safely repay. Which means we need to know the income.

Lesson 3 of 6 · NOI

The building's paycheck

Net Operating Income is what is left after tenants pay and the building is run, but before the bank gets a dollar. Every line is a design decision.

Rent−Vacancy−Expenses=NOI
Underwriter's eye

The envelope sets the utility line. The construction type sets the insurance line. The amenities set the vacancy line. You have been writing this spreadsheet your whole career without seeing it.

NOI÷Total cost=Yield on cost

Hold that yield against the the loan costs every year, interest plus principal. That gap is the whole story of building in 2026.

Lesson 4 of 6 · DSCR

The bank's one question

Debt Service Coverage Ratio: how many times over can the paycheck cover the loan payment? The bank wants a cushion, usually 1.25×, in case rents slip.

NOI÷Annual loan payment=DSCR
Loan we need
of cost
Loan the bank will make
at coverage
Underwriter's eye

The building covers its payment, barely. That is not enough. The bank shrinks the loan until coverage hits , and a hole opens up that someone has to fill with expensive money.

Lesson 5 of 6 · Leveraged return

What the investors earn

After the bank is paid, whatever is left belongs to equity. Divide that by what equity put in and you have the leveraged return, the cash-on-cash yield. Over fifteen years, with rent growth and a sale, it becomes an IRR.

(NOI−Loan payment)÷Equity=
Left for investors
per year
Investors put in
of cost
15-yr IRR
want
Underwriter's eye

Leverage magnifies. When a building yields more than its loan costs, borrowing lifts the return. When it yields less, against a loan, every borrowed dollar drags it down. That is negative leverage, and it is why a perfectly good building can be unbuildable. Investors want 5% or more in cash in year one and a IRR over the hold.

Lesson 6 of 6 · The verdict

This building dies in underwriting, not in design review.

Nothing about it is wrong. It simply yields in a world. Three numbers, one verdict.

NOI
the paycheck
DSCR
Fails
15-yr IRR
want
Now the good part

Every move that follows is something you already know how to draw. Watch what each one does to these numbers. Stack them, and the bank says yes.