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How to Analyze a Rental Property in 60 Seconds

A step-by-step tutorial on quickly sizing up a rental deal — cash flow, cap rate, and cash-on-cash return — so you can tell a good deal from a bad one in under a minute.

Read the full guideHow to Do a Rental Property Analysis

What this video covers

A quick, practical walkthrough of how to size up a rental deal fast — without a spreadsheet. It runs through the numbers that actually decide whether a property is worth pursuing:

  • Net operating income (NOI) — real income minus real operating expenses
  • Cash flow — what's left after the mortgage
  • Cap rate — to compare deals independent of financing
  • Cash-on-cash return — the return on the cash you actually invest

The point is speed: being able to look at a listing and know, in about a minute, whether it's worth a deeper look or a pass.

Try it yourself

Run your own numbers with the rental property calculator — plug in a real listing and watch the cash flow, cap rate, and cash-on-cash return update as you go. For the full written walkthrough, see the companion guide below.

Frequently Asked Questions

How do you analyze a rental property?

Start with the income and the real operating expenses to get net operating income (NOI), then layer in financing to see monthly cash flow. Two ratios tell you most of what you need: cap rate (NOI ÷ purchase price) to compare deals independent of financing, and cash-on-cash return (annual pre-tax cash flow ÷ cash invested) to measure the return on the money you actually put in. Underwrite at today's mortgage rate so the deal has to stand on its own.

What is a good cap rate for a rental property?

It depends on the market and property type — there is no universal number. Cap rate is most useful as a relative measure: comparing similar properties in the same area, and comparing a deal to the local average. A higher cap rate generally means more income relative to price (and often more risk or work), while a lower cap rate is common in higher-demand, lower-risk markets.

What is cash-on-cash return?

Cash-on-cash return is your annual pre-tax cash flow divided by the total cash you invested (down payment, closing costs, and any upfront repairs). It answers the practical question: what return am I getting on the money I actually put into this deal? Unlike cap rate, it accounts for your financing.

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