Most rental deals die in the details, but you don't need the details to know whether a property is worth a closer look. With three numbers you can screen almost any listing in about a minute and decide whether it's worth an hour of real diligence.
Start with the income the property produces
Before financing enters the picture, figure out the property's net operating income (NOI): the annual rent minus annual operating expenses — taxes, insurance, maintenance, management, and a vacancy reserve — but not the mortgage. NOI is what the building earns on its own, and it's the foundation for everything else.
Divide NOI by the purchase price and you get the capitalization rate, or cap rate. Because cap rate ignores financing, it lets you compare two properties on equal footing regardless of how each is funded. A higher cap rate means more income per dollar of price — often with more risk or work attached.
Then bring in the mortgage
Cap rate tells you about the property; cash flow tells you about your month. Subtract the mortgage payment, taxes, insurance, and every other recurring cost from the rent. What's left is monthly cash flow. Deals that look fine on a cap-rate basis often turn negative here once real insurance and financing costs are included — which is exactly the point of running the number.
Be conservative on the expenses you can't see on the listing. Budget for maintenance and a vacancy reserve even when the unit is occupied today, and include property management even if you plan to self-manage — your time has a cost, and one day you may hand it off.
Try the cash flow calculator →
Finish with return on your actual cash
The last number is cash-on-cash return: annual cash flow divided by the cash you put in — down payment, closing costs, and any rehab. Unlike cap rate, it accounts for leverage, so it answers the question that actually matters: what is this deal returning on my money? It leaves out appreciation, loan paydown, and tax benefits, so treat it as a floor rather than the whole story.
Put it together
Cap rate to compare, cash flow to survive, cash-on-cash to decide. Run those three and you can reject the obvious no-deals in seconds and reserve your real diligence — comps, inspection, contractor bids — for the handful that clear the bar. That's the entire idea behind PropIntel: enter the numbers, get an honest read, and move on.