How to read a rental property investment
Rent shows up once a month, and a line of claims is waiting on it. Vacancy trims what you collect. Operating bills keep the place livable. The loan gets paid, and the things that wear out need funding too. Whatever's left is your cash flow.
Tell NOI apart from your own cash
NOI leaves out the mortgage and the capital reserve you entered. Cap rate is annual NOI divided by the purchase price. Cash flow goes further and subtracts operating bills, the mortgage modeled here, and the reserve; the headline figure is monthly, with the annual total right beside it. Cash-on-cash divides that annual cash flow by your down payment plus the closing costs entered above.
Pay yourself for management even when you're the one doing it, and add whatever the fields miss — repairs, legal help, utilities you cover. Income taxes and capital projects you haven't entered sit outside these returns. Ask your lender about mortgage insurance and fees too, since principal and interest is only part of what you owe each month. The CFPB Loan Estimate guide walks through the main charges.
Treat the 1% and 50% rules as questions
The 1% rule holds monthly rent up against the price. The 50% rule guesses that half of rent goes to operating costs before the loan. They're quick sanity checks, not lending standards, and neither one tells you how your street performs. Trade them for real collections, the tax bill, a current insurance quote, a repair estimate, and a management fee before you decide.
Push one number and watch
Add a second vacant month. Raise the insurance quote. Drop in a new water heater. Watch both the annual return and the cash on hand the day that bill lands. A good month says nothing about whether the price is fair or values will rise, so pair it with comps and a reserve you can point to. The reserve calculator sizes replacements, and the cap-rate tool lets you test the income-to-price relationship.
Get the vacancy and repair lines honest and this page will still hold up on closing day.