This is the full underwriting pass on a rental property. Enter the purchase terms, financing, income and every operating expense, and the analyzer returns a complete deal snapshot: mortgage payment, effective gross income, true NOI, cap rate, monthly and annual cash flow, total cash invested, cash-on-cash return, DSCR, debt yield and break-even occupancy. It also assigns a neutral deal strength rating and explains exactly which numbers drove it.
Read the full guide: Cleveland Rental Property Under $60K: Is a Low Purchase Price a Good Deal?
What's included
- Amortizing mortgage payment from price, down payment, rate and term
- True NOI built from income, vacancy and nine expense categories
- Monthly and annual cash flow after debt service
- Cash-on-cash return on down payment, closing costs and upfront repairs
- DSCR and debt yield — the two metrics lenders check first
- Break-even occupancy so you know how much vacancy the deal survives
- Neutral deal strength rating with the reasoning shown
The order the numbers have to be built in
Good underwriting is sequential. Income first, then vacancy, then operating expenses to reach NOI. Only then does debt enter, producing cash flow, DSCR and debt yield. Skipping straight from rent to 'rent minus mortgage' is the single most common reason new investors buy a property that loses money in its first year of real repairs and turnover.
What lenders look at that investors often skip
DSCR and debt yield are underwriting gates, not vanity metrics. Many rental lenders want DSCR of at least 1.20x–1.25x, meaning NOI covers debt service with a cushion. Debt yield — NOI divided by the loan amount — tells a lender what return they would earn if they had to take the property back. If either number is thin, financing terms usually get worse, which makes cash flow worse still.
How to interpret the deal strength rating
The rating summarises three thresholds: DSCR, cash-on-cash return and break-even occupancy. 'Strong' means all three have cushion, 'Moderate' means the deal works but with less room for error, and 'Needs Review' means at least one metric is tight enough that a small miss on rent or repairs could turn the deal negative. It is a description of your inputs, not a forecast, and no rating makes any property a guaranteed win or loss.
Stress-testing before you commit
Run the same property three times: your base case, a case with vacancy two points higher and repairs 25% higher, and a case with rent 5% lower. If cash flow stays positive in all three, you have a resilient deal. If only the base case works, you are relying on everything going right — which is where most first-time rental losses come from.
Key formulas
Mortgage Payment (amortizing): Payment = P × r / (1 - (1 + r)^-n) where r = monthly rate, n = months Effective Gross Income = (Rent + Other Income) × (1 - Vacancy %) True NOI = Effective Gross Income - Operating Expenses Cap Rate = NOI / Purchase Price Annual Cash Flow = NOI - Annual Debt Service Cash-on-Cash = Annual Pre-Tax Cash Flow / Total Cash Invested DSCR = NOI / Annual Debt Service Debt Yield = NOI / Loan Amount Break-Even Occupancy = (Operating Expenses + Debt Service) / Gross Potential Income
Worked example: $250,000 rental at $2,200 rent, 20% down
- Down payment: $50,000 · loan $200,000 at 7% over 30 years → payment $1,330.60/month ($15,967/year)
- Gross potential income: $2,200 × 12 = $26,400; vacancy 6% → EGI $24,816
- Operating expenses: taxes $3,000 + insurance $1,400 + management 8% of EGI ($1,985) + maintenance $2,000 + CapEx $1,800 + utilities $480 + other $300 = $10,965
- True NOI: $24,816 - $10,965 = $13,851 → cap rate 5.54%
- Annual cash flow: $13,851 - $15,967 = -$2,116 (negative)
- Total cash invested: $50,000 down + $6,000 closing + $8,000 repairs = $64,000
- Cash-on-cash: -3.3% · DSCR 0.87x · break-even occupancy 102.0%
Deal strength: Needs Review. DSCR below 1.0x and break-even occupancy above 100% mean the property cannot cover expenses and debt even when fully occupied at this price and rate.
Frequently Asked Questions
What is a good cash-on-cash return on a rental?
Many investors target 8–12%, but appreciation-focused markets often deliver less and cash-flow markets more. The important test is whether the return compensates you for the work, risk and illiquidity compared with your alternatives.
What DSCR do lenders require?
Rental and DSCR-loan programs commonly look for 1.20x–1.25x or better, though requirements vary by lender, property type and loan size. Below 1.0x, NOI does not cover debt service at all.
What is break-even occupancy?
The occupancy level at which rental income exactly covers operating expenses plus debt service. Below that point, the property requires cash from you. Above roughly 90%, a deal has very little room for turnover.
Why is the deal strength rating not a recommendation?
It only reflects the numbers you typed in. Assumptions about rent, repairs and vacancy can be wrong, and no calculator can guarantee a property will perform well or poorly. Treat the rating as a summary, then verify the inputs.
Should CapEx be an operating expense here?
Include a CapEx reserve when judging your own cash flow — roofs and HVAC systems are real costs. Note that lender NOI treatment may differ, which is why DSCR from a lender can look better than yours.
Educational tool only — results are hypothetical projections from your assumptions, not financial, tax, legal or investment advice.