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Is this rental actually a good deal?
Cap rate is the fastest honest filter in rental investing — but only if the NOI is honest. This calculator builds NOI properly (rent minus vacancy minus real operating expenses, never the mortgage), then layers financing on top so you see both the property's unlevered yield (cap rate, GRM) and your actual leveraged result (cash flow and cash-on-cash return).
Investors use it in the first five minutes of screening a listing — honest NOI, cap rate, and GRM kill bad deals fast, and the financing layer shows whether the deal still cash-flows at today's rates. Agents use it to speak investor language with clients.
No. Cap rate = NOI ÷ price, and NOI excludes debt service by definition — it measures the property's yield independent of how you finance it. Your return with financing is cash-on-cash: (NOI − annual debt service) ÷ cash invested. A property can have a healthy 6% cap rate and still produce near-zero cash flow at high interest rates.
It depends on market and risk. Roughly: prime big-city multifamily often trades at 4–5%, suburban single-family rentals at 5–7%, and higher-risk or smaller-market properties at 8–10%+. Compare a deal to similar sales in the same market — the absolute number means little alone.
Property taxes, insurance, maintenance and repairs, capital expenditure reserves, management (even if self-managed — your time has a cost), utilities you pay, and HOA dues. Not the mortgage. Sellers' pro formas famously understate expenses; 35–50% of gross income is the common reality check for single-family rentals.