Free tool
Deal Analyzer
Verdict
−$592 /mo
4.47% cap · -6.08% cash-on-cash · 0.73 DSCR
Check comps: Zillow Rent Zestimate, Rentometer, RentCast.
Buying it
Loan term
Operating assumptions
The full numbers
Income
Expenses
Returns
Educational estimate only — not investment, tax, or legal advice. Verify rent, expenses, and financing with your lender, insurer, CPA, and an inspection. Questions →
How the rental analysis works
This calculator runs a residential rental through the standard operating-statement math. It starts from gross scheduled rent, subtracts a vacancy allowance to get effective gross income, subtracts operating expenses to get net operating income (NOI), and then measures NOI against the purchase price and against the cash you actually put in.
For a financed purchase it also subtracts the annual mortgage payment to show monthly cash flow and the debt service coverage ratio (DSCR) that lenders underwrite to. Every expense assumption is editable, because the defaults are only a starting point.
What the numbers mean
- Net operating income (NOI)
- Annual rental income after vacancy and all operating expenses, but before the mortgage. NOI = effective gross income − operating expenses.
- Cap rate
- NOI ÷ purchase price, as a percentage. A quick way to compare properties independent of financing. This tool also shows the cap rate on your all-in cost (price + closing + rehab).
- Cash-on-cash return
- Annual pre-tax cash flow ÷ total cash invested. This is the return on the money you actually bring to the table, and it moves with your down payment and rate.
- DSCR
- NOI ÷ annual mortgage payment. Lenders on investment loans typically want 1.20 or higher; below 1.0 the property doesn't cover its own debt.
- Gross rent multiplier (GRM)
- Purchase price ÷ annual gross rent. A rough screening ratio — lower is cheaper relative to rent.
- Operating expenses
- Property taxes, insurance, management, maintenance, a capital-expenditure reserve, HOA, and any owner-paid utilities. Mortgage payments are not an operating expense.
Rules of thumb (and their limits)
- The 1% rule
- Monthly rent ≈ 1% of purchase price. In today's Phoenix-metro pricing this is hard to hit on turnkey single-family homes; treat a miss as a signal to sharpen your rent and expense numbers, not an automatic no.
- The 50% rule
- Over time, operating expenses (excluding the mortgage) tend toward roughly half of gross rent once vacancy, maintenance, CapEx, and management are all counted. If your entered expenses are far below that, revisit them.
- A 'good' cap rate
- There's no single number. In the Phoenix metro, stabilized residential rentals have often traded in the ~4–6% cap range; higher caps usually mean more risk, more work, or a weaker location. Compare against other deals you could actually buy.
Frequently asked questions
What is a good cap rate for a rental property?
It depends on the market and the risk. In the Phoenix metro, stabilized residential rentals have commonly traded around a 4–6% cap rate in recent years. A higher cap rate generally compensates for older properties, weaker locations, or more management work, so compare a deal against other properties you could realistically buy rather than a fixed target.
How do I calculate cash-on-cash return?
Divide your annual pre-tax cash flow by the total cash you invested. Cash flow is net operating income minus the annual mortgage payment; total cash invested is your down payment plus closing costs and any up-front rehab. For an all-cash purchase, cash-on-cash return is close to the cap rate on your all-in cost.
What is DSCR and why do lenders care about it?
DSCR is net operating income divided by the annual mortgage payment. It tells a lender whether the property's income covers its debt. Most investment-property lenders want a DSCR of at least 1.20, meaning income is 20% above the payment; a DSCR under 1.0 means the property loses money before you add anything from your pocket.
How much should I budget for vacancy and maintenance?
Common starting points are 5–8% of gross rent for vacancy, 8–10% for property management, 5–10% for maintenance, and a separate 5% or so reserve for capital expenses like roofs and HVAC. Older homes and higher-turnover rentals warrant higher numbers. These are all editable in the calculator.
Is the 1% rule realistic in Arizona?
Rarely on turnkey single-family homes at current prices — rent is usually well under 1% of purchase price in Scottsdale, Tempe, and much of Phoenix and Chandler. The rule is a fast screen, not a verdict; the full NOI, cap rate, and cash-flow math matters more.
Does this account for appreciation, tax benefits, or loan paydown?
No. It measures current operating performance only — NOI, cap rate, cash-on-cash, DSCR, and cash flow. Appreciation, depreciation and other tax effects, and principal paydown are real parts of a return but depend on assumptions and your tax situation; discuss those with a CPA.