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Ken Lam Realty · Tools

Does this rental actually make money?

Price, loan, rent, expenses. See cap rate, monthly cash flow and return on your cash, live.

Purchase and loan

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Income

Rent entered as
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Expenses

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5-year view

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Monthly cash flow
$0 /mo
NOINet operating income, before the mortgage$0
Cap rateNOI ÷ price0%
Cash-on-cashYearly cash flow ÷ cash you put in0%
DSCRNOI ÷ mortgage payments0
GRMPrice ÷ yearly gross rent0
Break-even occupancyHow full it must be to cover all bills0%
5-year IRRCash flow + sale after 5 years, simple estimate—
Cash needed: $0 · Loan: $0 Mortgage (P&I): $0/mo · Gross rent: $0/yr Operating expenses: $0/yr · Equity at year 5: $0
Lenders who qualify on the property's rent (DSCR loans) often want DSCR of 1.0 to 1.25 or higher. Ask your lender.

Good / ok / weak cutoffs are rules of thumb, not rules. Bay Area cap rates are often low because prices are high.

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Next steps

  1. Check the rent you typed against real numbers. HUD fair market rents for Santa Clara and Alameda are in T51.
  2. Get a real investor loan quote. Investment property rates usually run higher than the rate you see on the news.
  3. Know how much you can raise rent later. AB 1482 and city rules are in T55.
  4. Selling another rental to buy this one? See if a 1031 exchange fits with T27.

Many people get this wrong: "cap rate includes my mortgage." It doesn't. Cap rate is NOI ÷ price, as if you paid cash. Your loan shows up in cash flow, cash-on-cash and DSCR.