Rental Buyer Proof Calculator

Because a cap rate is net operating income over value, and net operating income is rent less operating expenses less vacancy — taxes, insurance, management, maintenance, turnover and the months the property is empty. This page collects a rent and nothing else. Dividing gross rent by a price and calling the result a cap rate overstates the real one by the whole expense load, which on a single-family rental is commonly a third to a half of the rent, and it does it in a figure that sounds precise and gets repeated by the person you handed it to. The choice was to collect eight more fields or to leave it out; it is left out, and the investor suite's rental property calculator already collects them and computes it properly. Both figures this page does show are exact statements about the numbers you entered, which is the only kind of claim it makes.

No, and it is worth being clear because it gets treated as one. It is monthly gross rent as a share of the price, which is a screening device rather than an analysis — landlords use it to decide what is worth a second look, not to decide what to buy. It ignores every expense, so two properties at the same ratio can perform completely differently once taxes, insurance and management are in. Its usefulness to you is that it is the first thing a landlord buyer will run on your listing, in about four seconds, and knowing what it comes to before you send it is worth more than a more sophisticated figure they were never going to compute.

That depends entirely on the buyer, and this page will not name one. The floor a landlord works to moves with their cost of money, with what else they could buy that month, with whether they are buying for income or for appreciation, and with the market itself — a ratio that is unremarkable in one metro is unreachable in another. The field is editable for that reason and it loads at a value only because a numeric input has to load at something. Ask your buyer what theirs is; if they have not named one, clear the field and read the ratio on its own, which is still an exact statement about your numbers.

It is a ceiling, not a promise, and the distance between those two is where deals die. What the page computes is a percentage of the after-repair value you entered, at the percentage you entered — nothing more. An underwriter will also look at the buyer's credit and reserves, at whether the property is let and at what rent, at whether the income covers the payment, at a seasoning requirement that may mean waiting months after the purchase before any of this is available, and at their own appraisal, which may not agree with the value on this page. Every one of those can reduce the advance or remove it. Use the number your buyer's lender actually quoted them, and treat the result as the best case rather than the expectation.

That the refinance advances more than your buyer put in, so they end the cycle with all of their capital back and some of somebody else's, with the property still theirs. It is a real and ordinary outcome on a property bought well below its finished value, and it is the whole reason a landlord will pay attention to an off-market contract rather than buying on the open market. It is not free money: what has come back is borrowed against the house, it carries a payment the rent has to cover, and it is why the rent ratio and the refinance belong on the same page rather than on two. The figure the page emphasises alongside it is the largest fee at which that stays true, which is the version of it you can act on.

That is a commercial decision and not one this calculator makes, but the arithmetic is why the question arises at all. A flipper's ceiling comes out of a resale that has to cover a commission, a carry and a profit; a landlord's comes out of what a lender will advance and what the rent supports, and the two constraints bite at completely different prices on the same house. A property that is thin for a flip can be comfortable for a rental and the reverse happens just as often. Running both this page and the buyer profit page on the same contract tells you which kind of buyer your deal is actually for, which is usually more useful than moving the price.