Investing
Evaluate property with the costs still in the picture.
Vacancy, repairs, reserves, operating costs, and debt service remain visible before appreciation scenarios.
Rental cash flow
Income less vacancy, operating expenses, reserves, and debt service.
Available nowCap rate basics
Use NOI—not mortgage payment—to calculate the screening ratio.
Available nowSell or rent it out
Compare sale proceeds with a user-entered rental scenario.
Keep financing out of the operating numbers
Net operating income and cap rate are screening tools, not forecasts — and they only work if financing stays out of them. Mixing a mortgage payment into "operating expenses" is one of the most common ways a rental property's numbers get inflated or distorted before a buyer ever sees the real picture. Income minus vacancy minus true operating costs gives NOI. Debt service gets subtracted afterward, when you're deciding what you'll actually keep as cash flow.
Before treating a number as decision-ready
- Has vacancy and collection loss actually been subtracted from gross rent, or is the number based on 100% occupancy?
- Are operating expenses (repairs, management, insurance, reserves) realistic for the property's age and condition — not just a rule-of-thumb percentage?
- If deciding between selling a property and renting it out instead, has the comparison accounted for both cash flow and the equity difference over the same holding period?
For the full income-to-cash-flow walkthrough and a rental-specific due-diligence framework, see rental cash flow basics and how to evaluate a rental property before buying.