Four numbers decide a rental deal, and they answer different questions: cap rate compares properties, cash-on-cash compares uses of your money, cash flow determines whether it feeds you or eats you, and DSCR determines whether a lender will finance it. This calculator includes the reserves most spreadsheets quietly omit.
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Cap rates commonly run 4%–10% depending on market and asset quality. Lower rates reflect stronger, more stable markets where investors accept less yield; higher rates usually compensate for more risk, weaker tenant demand, or older buildings.
Cap rate is unlevered — annual net operating income divided by purchase price — so it compares properties regardless of financing. Cash-on-cash is levered: annual cash flow divided by the cash you actually invested. Leverage can make a mediocre cap rate produce a strong cash-on-cash return.
A screening heuristic: monthly rent should be at least 1% of the purchase price. It is a filter for which deals deserve a full analysis, not an underwriting standard — many good properties in strong markets fail it, and many that pass it still lose money.
Debt service coverage ratio is annual net operating income divided by annual debt service. Lenders offering DSCR loans typically require at least 1.25, meaning the property earns 25% more than its mortgage costs — and they qualify the property rather than your personal income.
Vacancy, maintenance, and capital expenditures — the three that turn a losing deal into a winner on paper. This calculator budgets 1% of property value annually for maintenance and another 1% for capex, plus a vacancy allowance, by default.
Sources: Standard real-estate investment metrics (NOI, cap rate, cash-on-cash, DSCR); Freddie Mac — multifamily and investment property underwriting standards; Standard amortization (annuity) formula.
Estimates for educational purposes only — not a loan offer, financial advice, or a commitment to lend. Actual rates, payments, and terms vary by lender and creditworthiness.