How to analyze a rental property
A good rental analysis answers four questions, and each calculator on this site handles one of them:
- Does it cash flow? Start with the rental property calculator. It subtracts the mortgage, taxes, insurance, vacancy, repairs, capital expenditures and management from the rent to show what you actually keep each month.
- Is the price fair? The cap rate calculator compares net operating income to price, so you can compare properties regardless of how they are financed.
- What does my cash earn? The cash on cash return calculator measures the yearly cash flow against the money you actually put in.
- Can I recycle my capital? The BRRRR calculator shows how much cash a cash-out refinance returns after a rehab.
Before you even run the numbers, the 1% rule calculator is a fast screen for listings, and the investment property mortgage calculator shows payments at the higher rates and down payments lenders require for non-owner-occupied homes.
Thinking about your own home instead?
The rent vs buy calculator compares the full cost of owning (interest, taxes, insurance, maintenance and selling costs) against renting and investing the difference, year by year.
Key rental property metrics at a glance
| Metric | Formula | Common target |
|---|---|---|
| Cap rate | NOI ÷ purchase price | 5% to 10% depending on market |
| Cash on cash return | Annual cash flow ÷ cash invested | 8% to 12%+ |
| DSCR | NOI ÷ annual debt service | 1.20 or higher for most DSCR loans |
| 1% rule | Monthly rent ÷ price | 1% or more (screening only) |
| Gross rent multiplier | Price ÷ annual rent | Lower is better; compare locally |
Targets are rules of thumb, not guarantees. A 5% cap rate property in a fast-appreciating city can outperform a 10% cap rate property in a declining one.