How to analyze a rental property in 5 minutes

The four numbers that matter

You don't need a 50-tab spreadsheet to triage a rental. Four numbers do most of the work:

1. Monthly cash flow — what hits your bank account after every operating expense and the mortgage payment.
2. Cap rate — NOI ÷ purchase price. The unleveraged yield. Lets you compare deals across financing structures.
3. Cash-on-cash return — annual cash flow ÷ total cash invested. The actual return on your money.
4. DSCR — NOI ÷ debt service. The bank's safety metric, but also yours. Below 1.20 is fragile.

If those four are red, the deal is dead. If those four are green, the rest is detail.

The trap inputs

The math is rarely wrong. The inputs are. Three common traps:

• Optimistic vacancy. Don't underwrite at 0%. Use market vacancy, never in-place. 5-8% in stable markets, 10%+ in higher-turnover areas.
• Forgotten CapEx. Roof, HVAC, water heater all die on a schedule. Reserve 5-10% of gross rent for CapEx and another 5-10% for maintenance. It feels like a lot until the furnace goes out.
• Property management as $0. Even if you self-manage today, you won't forever. Model 8-10% in case you're traveling, dealing with a problem tenant, or just want your evenings back.

What the calculator can't tell you

The math doesn't capture:

• Market trajectory. Two identical buildings — one in a growing metro, one in a shrinking one — will diverge wildly over 10 years.
• Tenant quality. A C-class building in a B+ neighborhood can rent for B-class prices to better tenants. The reverse is true too.
• Insurance availability. Coastal Florida, wildfire-prone California, hail-belt Texas — insurance can vanish or triple in cost on short notice.

Run the numbers first. If they pencil, then ask the qualitative questions. If they don't pencil, no qualitative story is going to save the deal.

The 5-minute workflow

1. Pull the listing. Note price, sqft, beds/baths, taxes.
2. Look up market rent for the unit (Zillow Rentals, Rentometer, BiggerPockets Rent Estimator).
3. Plug into the Rental Property Calculator.
4. Use conservative defaults: 5-8% vacancy, 5-10% maintenance, 5-10% CapEx, 8% management.
5. If cash flow is positive and cap rate is above your market's risk-free comp by 2%+, dig deeper. If not, move on.

Five minutes per deal. Look at 50 deals before you write your first offer.