Analyze investment properties with cap rate, cash-on-cash return, and cash flow projections.
Tip: For quick analysis, use 40-50% expense ratio. For detailed analysis, break down expenses by category using "Flat / Year" mode.
Analyze property investments by entering the deal parameters below.
Higher cap rates indicate higher returns but may signal higher risk. Most investors target 5-10% depending on market and property class.
Measures return on your actual investment. 8-12% is often considered good, but varies by market and investor goals.
Positive cash flow is essential. Many investors target $100-200/door minimum after all expenses and debt service.
Cap rate (capitalization rate) is the ratio of Net Operating Income (NOI) to the purchase price. It measures the return you would receive if you paid all cash for the property. A 6% cap rate means the property generates 6% of its purchase price in NOI annually.
Cash-on-cash return measures the annual pre-tax cash flow relative to the actual cash invested (typically your down payment). Unlike cap rate, it accounts for financing. An 8% cash-on-cash return means you earn 8% annually on the cash you invested.
NOI is the annual income from a property after deducting all operating expenses but before debt service (mortgage payments). It equals Gross Potential Income minus Vacancy Loss minus Operating Expenses.
Include property taxes, insurance, utilities (if landlord-paid), maintenance/repairs, property management, landscaping, and reserves for capital expenditures. Do NOT include mortgage payments or income taxes in operating expenses.
A 5% vacancy rate is common for stable markets with strong rental demand. Use 8-10% for areas with higher turnover or seasonal rentals. Research your local market vacancy rates for the most accurate analysis.
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