Most “deals” die in the same place: the rent was a wish, the expense line was a percentage, and the mortgage payment was treated as the whole carrying cost. This page is the sequence we use on the site’s calculators when the goal is a decision, not a screenshot.
It is education, not a recommendation to buy any property. County tax bills, insurance quotes, and lender overlays change. Verify the live numbers.
Start with rent you can defend in writing
Do not type the listing’s “estimated rent” into a calculator and call it analysis. Pull three leased comps within a half-mile, same bed/bath band, closed in the last 90 days if the market is moving. If those leases are $1,850, $1,900, and $2,050, your underwriting rent is not $2,200 because the kitchen has new quartz.
Use the middle of the leased set, then haircut 3–5% if the subject is tired, on a busier street, or missing a comparable amenity. The Deal Analyzer will happily print a positive cash-flow figure on a fantasy rent. That is a feature of arithmetic, not a property.
Rebuild the expense stack from documents, not slogans
The calculators on this site use a 1.5% of price annual plug for taxes, insurance, and maintenance mashed together. That is a screen, the same way a 1% rent rule is a screen. It is not an operating statement.
- Taxes: current bill, then ask what happens after a sale. Some counties reassess toward purchase price. A $4,100 bill on a $210,000 assessed value is not the tax on a $289,000 purchase.
- Insurance: quote the actual address. Coastal, hail, and older-roof carriers have been non-renewing ordinary houses. If you cannot bind a policy, you do not have a deal.
- Maintenance + capex: a 1978 roof, polybutylene, and a 15-year HVAC are not “1% of price.” They are calendar events.
- Vacancy + turnover: days vacant × daily rent, plus paint and leasing. Five percent vacancy on a house that historically sits 40 days between tenants is theater.
Work the full stack on the expense-stack guide before you trust a monthly cash-flow number.
Worked screen: $247,500 purchase, $1,895 rent
Assume 20% down ($49,500), 6.85% 30-year fixed. Principal and interest is about $1,297. If you stop there, $1,895 − $1,297 = $598 “cash flow.” That number has wrecked more first purchases than any interest-rate headline.
Now put real-ish carrying costs on it: taxes $265, insurance $155, maintenance reserve $125, capex $90, vacancy 7% ($133), lawn/water you agreed to cover $40. Operating drag is $808. Cash flow after P&I is −$210.
Cap rate on this screen (NOI $1,895×12 − $808×12, divided by $247,500) is about 5.3% — not a disaster in a job-growth suburb, and not a cash-flow machine. Cash-on-cash on the negative flow is negative. Leverage here is amplifying a thin yield, not manufacturing return.
That is the point of the mortgage calculator sitting next to investment metrics: P&I is the clean number. The rest of the page is a warning label.
When the 1% rule is a useful filter — and when it is a lie
$1,895 / $247,500 is 0.77%. The 1% crowd would have never opened the spreadsheet. Sometimes that is correct: you just avoided a wage-replacement property that does not replace wages. Sometimes it is how you miss a house in a high-basis coastal market where 0.6% rent-to-price is normal and the bet is debt paydown plus scarcity, not monthly surplus.
Use 1% as a sort, then immediately replace it with NOI. If you cannot explain why you are buying below 1% without saying “appreciation,” you do not have a thesis. You have a hope.
Leverage only after the unlevered picture is honest
Run the property as if you paid cash: NOI / price. If that yield is 4% and your mortgage is 6.85%, debt is not “other people’s money making you rich.” It is a spread you are paying for the privilege of owning. That can still be rational (forced savings, inflation on the rent, a value-add that lifts NOI). It is not rational because a YouTube thumbnail said so.
Stress it on the scenario simulator: vacancy +3 points, rate +1.5 if you are on an ARM or a refi plan, insurance +40%. If the bear case needs a miracle rent bump in year one, the offer is too high.
What to take to a lender or inspector
- Leased rent comps with addresses, not Zillow Zestimates.
- Tax bill plus a one-line note on reassessment risk.
- Insurance quote or a written “cannot bind” from a broker.
- A capex list with years (roof, HVAC, water heater, sewer), not a monthly plug.
- The cash-flow print from this site and a version where you replaced the 1.5% plug with those documents.
If those five items do not exist yet, you are not underwriting. You are decorating a listing.
Next: lock the pre-offer checklist before you write a number the seller can screenshot.