Run your rental
Estimates only. Percentages are of gross rent. Results are before income taxes.
What each number tells you
Cash flow: what's left each month after the mortgage and every operating cost. If it's negative, you're paying to own the property.
Cap rate: net operating income divided by price. It compares properties regardless of financing.
Cash on cash return: annual cash flow divided by the cash you put in. It shows what your money is actually earning.
DSCR: rent divided by the full payment. Many DSCR lenders look for 1.0 or higher, with better terms around 1.2 and up. See DSCR loans.
Conventional qualifying: lenders count 75% of rent against the full payment. A positive number helps you qualify, and a negative one counts against you. See rental income rules.
The numbers people skip
Vacancy, repairs and capital expenses. A roof, an AC unit or a water heater will come due, and turnover costs money. I use conservative numbers on my own deals because I've paid for every one of those surprises at some point.
Frequently asked questions
What is a good cash on cash return?
It depends on your goals and market. Compare it with what else your money could earn.
What DSCR do lenders want?
Often 1.0 or higher, with better pricing around 1.2 and up.
Why only 75% of rent for qualifying?
Lenders allow for vacancy and costs.
Should I include property management if I self manage?
Yes. Your time has value, and you may hire a manager later.