Property Investment Analyzer 2.0
Advanced property analysis tool with sensitivity testing, multi-property comparison, and detailed financial projections.
One Property, Every Angle - Before You Write the Offer
A rental is worth buying when it produces positive cash flow under realistic rent, vacancy and expense assumptions, survives a reasonable stress test, and still makes sense after the costs of an eventual sale. This analyzer computes the core return metrics - cash-on-cash return, cap rate, monthly cash flow, NOI and a 1% rule check - rolls them into a 0-100 screening score, and projects value, equity and total return five years out at your chosen appreciation rate.
Two extra tabs separate this tool from a basic calculator. The comparison tab lines up several candidate properties on identical assumptions. The sensitivity tab stress-tests a single deal by sweeping rent, expenses, purchase price or appreciation across a range, showing where the deal bends and where it breaks. The guide below the tool walks through a full underwriting process, a worked example with every number shown, and how to think about the exit before you buy.
Property Details
Include mortgage, insurance, taxes, maintenance, etc.
Investment Analysis
Key Metrics
Enter property details to see investment analysis
How to Read the Analyzer’s Inputs and Outputs
The tool asks for six numbers: purchase price, down payment, monthly rent, monthly expenses, current value (it defaults to the purchase price) and an appreciation rate. Everything else is derived. Cash flow is rent minus expenses. Cash-on-cash return divides a year of cash flow by the down payment. Cap rate divides annual net income by value. The 1% rule compares monthly rent to 1% of value. The five-year projection adds straight-line appreciation to five years of cash flow.
Two choices shape what those outputs mean. First, decide whether “monthly expenses” includes your mortgage payment. Most landlords include it, because they want cash flow to mean money left over after every bill. If you do, the cap rate the tool shows is really a post-debt yield and will understate the property’s true cap rate. Second, the tool uses your down payment as the cash invested. If you also pay closing costs or fund repairs at purchase, your true cash-on-cash return is lower than the screen shows; divide annual cash flow by your total cash in to get the real figure.
Neither choice is wrong, as long as you are consistent across every property you compare. Write your conventions down once and use them for every deal.
A Full Underwriting Walkthrough, Step by Step
Underwriting means building the property’s income statement before you own it, then testing it. Work through these steps in order; each one feeds the next.
1. Establish market rent from evidence
Use the rent comparable units actually lease for, not the seller’s pro forma or the current tenant’s below-market rent. Look at recent listings and leases for similar size, condition and location. The rent estimator is a starting point; local property managers and listing history are better evidence. If the current lease is below market, model the existing rent until the lease can lawfully be renewed at a higher rate.
2. Subtract vacancy and credit loss
Gross scheduled rent assumes 100% occupancy and 100% collection. Neither happens. Deduct an allowance for turnover gaps and unpaid rent to get effective gross income. A month per year is a common planning figure; use more for student, seasonal or high-turnover units.
3. Build operating expenses line by line
List property tax (from the tax assessor, adjusted for any reassessment on sale), insurance (get a real quote), routine repairs, a capital expenditure reserve for replacements, property management (even if you self-manage, price your time), utilities you pay, HOA dues, landscaping, pest control, and accounting. A single blended “35% of rent” guess hides the line items that kill deals. The expense ratio calculator and the property analysis worksheet help you check that nothing is missing.
4. Calculate NOI and the true cap rate
Net operating income is effective gross income minus operating expenses, before mortgage payments and income taxes. Divide NOI by the purchase price for the cap rate. This is the property’s unlevered yield and the fairest way to compare one building with another.
5. Layer in financing
Get a real rate quote for an investment-property loan, which is usually priced higher than an owner-occupied mortgage. Annual debt service is twelve monthly principal-and-interest payments. Divide NOI by debt service for the debt service coverage ratio (DSCR); lenders commonly look for something above 1.0, and many want 1.2 or more. The financing calculator will produce the payment.
6. Compute cash flow and cash-on-cash return
Cash flow is NOI minus debt service. Cash-on-cash return is annual cash flow divided by all the cash you put in: down payment, closing costs and any initial repairs.
7. Stress-test, then model the exit
Run the downside cases described below, then estimate what you would net if you sold in five or ten years. Only then decide what you are willing to pay. Pair this walkthrough with the due diligence checklist so the physical inspection and title work confirm the numbers you underwrote.
Worked Example: Underwriting a $280,000 Duplex
Example (hypothetical): a duplex listed at $280,000 with two units that each rent for $1,450, so $2,900 a month in total. The buyer puts 25% down ($70,000), pays about $8,000 in closing costs, and finances $210,000 at 7% over 30 years.
| Gross scheduled rent ($2,900 × 12) | $34,800 |
| Less vacancy and credit loss (5%) | -$1,740 |
| Effective gross income | $33,060 |
| Property tax | -$3,400 |
| Insurance | -$1,700 |
| Repairs (8% of gross rent) | -$2,784 |
| Capital expenditure reserve (5% of gross rent) | -$1,740 |
| Management (8% of collected rent) | -$2,645 |
| Other (lawn, pest control, accounting) | -$900 |
| Net operating income | $19,891 |
| Debt service ($1,397 × 12) | -$16,764 |
| Annual cash flow | $3,127 |
The ratios follow directly. Operating expenses total $13,169, or about 40% of effective gross income. The cap rate is $19,891 ÷ $280,000 = 7.1%. DSCR is $19,891 ÷ $16,764 = 1.19, just under the 1.2 many lenders like to see. Cash-on-cash return on the full $78,000 invested is $3,127 ÷ $78,000 = 4.0%.
To reproduce this in the analyzer, enter $2,755 as monthly rent (effective income ÷ 12) and $2,494 as monthly expenses (operating expenses ÷ 12 plus the $1,397 mortgage). The tool shows about $261 a month of cash flow. Its cash-on-cash figure is 4.5% because it divides by the $70,000 down payment only, and the score comes out around 55, “fair”. That is the honest read: a sound, unexciting property whose return depends heavily on rent holding up and on what happens at exit.
Sensitivity Analysis: Where This Deal Breaks
A base case is one guess. Sensitivity analysis asks what happens when each guess is wrong in the direction that hurts. Using the duplex above and changing one assumption at a time:
- Rent 10% lower ($2,610 a month): NOI falls to $17,302 and annual cash flow to about $538.
- Vacancy doubles to 10%: cash flow falls to about $1,526.
- Operating expenses run 10% over budget: cash flow falls to about $1,810.
- Interest rate 8% instead of 7%: the payment rises to about $1,541 and cash flow falls to about $1,399.
- Interest rate 6% instead of 7%: the payment drops to about $1,259 and cash flow rises to about $4,783.
Two findings stand out. Rent is the most powerful lever: a 10% miss wipes out more than 80% of the cash flow. And the break-even rent, where cash flow hits zero, is roughly $2,600 a month, only about 10% below the base case. That is a thin margin of safety. A buyer who sees this before making an offer can negotiate on price, put more cash down, or walk away; a buyer who sees it after closing can only hope.
In the analyzer, the sensitivity tab runs the same idea automatically across six steps for rent, expenses, appreciation and purchase price. Look first at the -10% rent and +10% expense rows. If either turns cash flow negative, ask what reserves you would draw on, and for how long, before you buy.
Exit Assumptions: Model the Sale Before You Buy
Every rental ends in a sale, a refinance, a 1031 exchange, or an inheritance. Underwriting that stops at year-one cash flow ignores the event that usually determines most of the total return. Continue the duplex example five years out, keeping rent and cash flow flat for simplicity and assuming 7% selling costs (commission plus closing):
- Loan balance after 60 payments: about $197,700 (about $12,300 of principal repaid).
- Flat prices: sale at $280,000, less $19,600 selling costs, leaves about $62,700 of equity. Add five years of cash flow ($15,635) and the total comes back to roughly the $78,000 invested. Five years of work for a break-even before tax.
- 3% annual appreciation: value about $324,600, less $22,700 selling costs, leaves about $104,200. Total profit before tax is about $41,800 ($15,635 of cash flow plus $26,200 of equity growth beyond the original cash).
Taxes then take a share. Depreciation on residential rental property is spread over 27.5 years (IRS Publication 527). If $224,000 of the price is building rather than land, that is roughly $8,145 a year, or about $40,700 over five years. When you sell, the gain attributable to that depreciation (unrecaptured section 1250 gain) is taxed at a maximum rate of 25% (IRS Topic No. 409), with the rest of the gain taxed at long-term capital gains rates, and possibly the 3.8% net investment income tax on top. The after-tax exit can look quite different from the pre-tax one.
To see that after-tax picture, run your numbers through the keep-or-sell rental property calculator, which compares selling now, holding, and exchanging, with 2026 tax rules built in. If you expect to trade up rather than cash out, the 1031 exchange calculator shows how much tax a qualifying exchange could defer. Underwriting the exit at purchase also tells you what appreciation you are really relying on, which is the honest measure of how speculative the deal is.
The Original Quick Example: A Cash-Flow Screen
The analyzer also works as a fast first screen. Consider a $300,000 duplex bought with $60,000 down that rents for $2,600 a month against $2,000 of monthly expenses including the mortgage. Cash flow is $600 a month, $7,200 a year, a 12% cash-on-cash return on the down payment. The 1% rule benchmark is $3,000, so the property misses both the rule and the 90% near-miss band. The result is a score of 70, “good”: strong leveraged cash flow and an average rent-to-price ratio.
At 3% appreciation the projection adds about $9,000 of value per year, so the five-year total return is $36,000 of cash flow plus $45,000 of appreciation, or $81,000 (135% on the $60,000 down payment). Remember what that projection leaves out: selling costs, taxes, closing costs at purchase, and the chance that rent or expenses move against you. Use the quick screen to decide which properties deserve the full walkthrough above.
Common Underwriting Mistakes
- Using the seller’s numbers. Pro forma rents and “the owner does all repairs himself” expense figures are marketing. Rebuild both from evidence.
- Leaving out vacancy, capital reserves or management. Each looks optional in year one. Over a ten-year hold, none of them is.
- Forgetting the tax reassessment. In many places a sale resets the assessed value, so the seller’s tax bill may understate yours.
- Counting appreciation as income. Appreciation is unrealized until you sell or refinance, and it can be negative for years.
- Ignoring the exit. Selling costs and taxes on sale can absorb years of cash flow. Model them before you buy.
- Mixing conventions between deals. If one property’s expenses include the mortgage and another’s do not, the comparison tab will mislead you.
Related Tools and Guides
- ROI calculator and the ROI formulas cheat sheet
- Break-even calculator for occupancy and rent floors
- Multi-unit property calculator for larger buildings
- Property investment due diligence guide
- How to calculate ROI on rental properties
- Tax strategy guide for depreciation and sale planning
Frequently asked questions
How is the 0-100 investment score calculated?
The score weights five factors: cash-on-cash return (up to 25 points, with 10%+ earning the maximum), cap rate (up to 25 points, maxing out at 8%+), positive monthly cash flow (20 points), passing or nearly passing the 1% rule (up to 15 points), and positive net operating income (15 points). Scores of 80+ read as excellent, 60-79 good, 40-59 fair, and below 40 poor. It is a screening grade, not a verdict: a 65 in a stable neighborhood can beat a 75 next to a highway.
Should monthly expenses in the analyzer include the mortgage payment?
Include it if you want the cash flow and cash-on-cash figures to reflect what actually lands in your bank account, which is how most small landlords use the tool. The trade-off is that the cap rate shown is then calculated on cash flow after debt service, so it will read lower than a true cap rate. For a true cap rate, run the deal once with operating expenses only (no principal or interest) and note the cap rate, then run it again with the mortgage added for cash flow.
What appreciation rate should I use in the projections?
The default of 3% per year is a conservative planning baseline, not a forecast for any market. Five-year projections compound small differences into large ones, so resist plugging in the growth some markets posted in boom years. A useful discipline is to underwrite the deal so it works at 0% appreciation and treat anything above that as upside rather than the reason to buy.
What does the sensitivity analysis tab actually test?
It moves one input at a time (rent, expenses, appreciation, or purchase price) by -20%, -10%, -5%, +5%, +10% and +20% and shows how monthly cash flow, five-year ROI and the score respond. This exposes which assumption your deal is most fragile to. If a 10% drop in rent flips the property to negative cash flow, you have little margin of safety; if returns stay acceptable across the whole tested range, the deal is robust to normal market noise.
What vacancy and maintenance allowances are reasonable?
There is no universal figure; use local evidence. Many small landlords budget a vacancy allowance of around one month per year (roughly 5-8% of gross rent) plus separate reserves for routine repairs and for big-ticket replacements such as roofs, HVAC and water heaters. Older buildings and properties with high tenant turnover need more. The worst choice is zero, because every rental has vacancy and repairs eventually.
How should I use the multi-property comparison?
Enter each candidate property with its own price, down payment, rent and expenses, then compare scores and metrics side by side. Filling in real numbers for every candidate forces apples-to-apples assumptions. Watch for the common pattern where the cheapest property posts the best cash-on-cash return but carries the highest repair and vacancy risk; the numbers frame the decision, they do not make it.
Why does the analysis need an exit assumption if I plan to hold?
Because most of a rental’s total return is realized when you sell, refinance or exchange, and that event carries costs: agent commissions and closing costs, depreciation recapture taxed at up to 25%, and capital gains tax. A deal that only works if you sell at a high price in year five is a speculation, not an income property. Model at least a flat-price exit, and use the keep-or-sell calculator to see the after-tax result of selling versus holding.
Does the analyzer account for income taxes?
No. It reports pre-tax cash flow and returns. Depreciation, the passive activity loss rules, and the tax on a future sale can change your after-tax result considerably, in both directions. Treat the analyzer as the operating picture, and use the tax strategy guide and the keep-or-sell calculator, or a CPA, for the after-tax picture.
This page and the analyzer are general educational information, not investment, legal or tax advice. Examples are hypothetical. Tax rules change; confirm current rules with a CPA or tax attorney before acting.