1. Screen fast
Use the 1% rule or GRM to discard obvious misses in a minute.
2. Verify rent
Pull at least three comparable active and recently leased listings with the same beds/baths and condition. Use the lowest realistic figure.
3. Estimate every expense
Get the real tax bill, an insurance quote, HOA dues, and budget repairs, CapEx, vacancy and management even if you self-manage. See the expense checklist.
4. Calculate NOI and cap rate
NOI = income − vacancy − operating expenses. Cap rate = NOI ÷ price (NOI calculator).
5. Add financing
Subtract the mortgage payment to get cash flow, and divide annual cash flow by cash invested for cash-on-cash return.
6. Check the lender’s view
For DSCR loans, rent ÷ PITIA must usually be ≥ 1.0–1.25 (DSCR calculator).
7. Stress-test
Re-run with rent −10%, vacancy 10%, and a major repair. If the deal still survives, it is worth an offer. The rental cash flow calculator lets you share each scenario as a link.