Rental property analysis is the process of evaluating a property's income potential, operating expenses, financing structure, and long-term viability as a buy-and-hold investment. It combines cash flow projections, cap rate calculations, cash-on-cash returns, and market trend analysis to determine whether a property deserves acquisition capital.
Rental property analysis separates amateur landlords from professional investors. It is not enough to buy a house and hope it rents—the numbers must work under conservative assumptions, including vacancy, maintenance surprises, and market softness.
Key takeaway
Projecting rental income
- Market rent: Check comps on rental listing sites and property manager opinions
- Other income: Laundry, parking, storage, pet fees
- Vacancy allowance: Typically 5–10% of gross income
- Effective gross income: Gross potential income minus vacancy
Operating expenses
- Property taxes: Based on assessed value and local rates
- Insurance: Landlord policy (higher than owner-occupant)
- Maintenance: 5–10% of gross rent annually
- Property management: 8–12% of collected rent
- Utilities: Only if owner-paid (common in multifamily)
- HOA fees: If applicable
- Capex reserve: 5–10% for roof, HVAC, appliances, flooring
Key analysis metrics
Net Operating Income (NOI): Effective gross income minus operating expenses (before debt service). This feeds into cap rate calculations.
Cash Flow: NOI minus debt service (principal + interest). Positive cash flow means the property pays you monthly; negative means you subsidize it.
Cash-on-Cash Return: Annual cash flow divided by total cash invested. See cash-on-cash guide for details.
Cap Rate: NOI divided by property value. See cap rate guide.
Screening rental deals on OffMarket Deck
Filter by buy-and-hold strategy, then cross-check listed prices against local rent comps. Use the rental calculator to model cash flow with your financing assumptions before requesting a showing.