Calculator · Investing
Investment property analyzer
Short answer
A rental works when the rent you collect covers the operating costs and the mortgage with room to spare. Enter the price, loan and rent to see monthly cash flow, NOI, cap rate, cash-on-cash return and DSCR. The starting numbers are assumptions; replace them with the property's real figures.
The property
Starting assumptions for a typical Palm Beach County rental, not market data: a $450,000 home, 25% down, a 7% rate, $3,300 rent, 5% vacancy, $9,000 property tax (2% of price; in Palm Beach County, 2025 rates without homestead run from about 1.5% to 2.3% of assessed value depending on the city, see the property tax estimator), $4,800 insurance, 8% maintenance, 10% management and closing costs of 2% of price. Use your lender's quote, a real insurance quote and the rent the home can actually get.
Not included: capital repairs such as a roof, flood insurance, special assessments, income tax, depreciation and appreciation.
Monthly cash flow
-$838
-$10,055 a year after the mortgage
Cap rate
3.8%
NOI ÷ price
Cash-on-cash
-8.3%
Cash flow ÷ cash in
DSCR
0.63
NOI ÷ mortgage payments
NOI
$16,890
Per year, before the mortgage
Yearly breakdown
- Scheduled rent
- $39,600
- Vacancy (5%)
- -$1,980
- Collected rent
- $37,620
- Property tax
- -$9,000
- Insurance
- -$4,800
- HOA or condo fee
- $0
- Maintenance (8% of rent)
- -$3,168
- Management (10% of collected rent)
- -$3,762
- Operating expenses
- -$20,730
- Net operating income
- $16,890
- Mortgage payments ($2,245 a month, 30 years at 7%)
- -$26,945
- Cash flow
- -$10,055
- Loan amount
- $337,500
- Cash invested (down payment plus closing costs)
- $121,500
Estimate only, not a loan quote, an appraisal or financial advice. Results depend entirely on the numbers you enter.
From an investor
Oleg co-founded Latitude Partners and has spent 25 years buying, renovating and reselling residential and commercial property. When he looks at a rental, he starts where a lender does: what the property earns on its own, then what the loan takes, then what is left for you. If you want a second set of eyes on a deal, send him the address.
Explained
Reading the numbers on a rental
What is net operating income (NOI)?
NOI is the rent you actually collect minus the costs of running the property: property tax, insurance, HOA, maintenance and management. It leaves out the mortgage, so you can compare properties no matter how they are financed.
What is a cap rate?
Cap rate is NOI divided by the purchase price. It shows the return the property produces on its own, before financing. A higher cap rate means more income for each dollar of price.
What is cash-on-cash return?
Cash-on-cash return is your yearly cash flow after the mortgage divided by the cash you put in: the down payment plus closing costs. It is the return on your own money in the first year.
What is DSCR?
The debt service coverage ratio is NOI divided by the yearly mortgage payments. Below 1.0, the rent does not cover the loan. Lenders that underwrite on rental income set a minimum ratio, so ask yours what it is.
Why is property tax higher on a rental?
In Florida, rentals and second homes do not get the homestead exemption, so they pay the full millage on their assessed value, which resets to market value in the year after you buy. Use the property tax estimator's without-homestead number.
Looking at a rental property?
Oleg will pull the comps and the rent picture before you make an offer.