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Rental Underwriting
Underwriting is the heart of every deal: turn a listing into cap rate, cash-on-cash, DSCR, and monthly cash flow, then decide. These guides walk the metrics and the pro forma; the calculators run the math.
Guides
How to underwrite a rental property in 60 seconds
The five numbers, four metrics, and two sanity checks every investor uses to triage a deal — without a spreadsheet.
9 min readWhat's a good cap rate for rental property in 2026?
Benchmarks by market type, the framework professionals actually use to evaluate cap rate, and why pre-2022 intuition is silently buying investors into negative leverage.
9 min readCap rate vs cash-on-cash vs DSCR: which one actually matters?
Three different metrics, three different jobs. A plain-English guide to when each one matters and the 2026 negative-leverage trap most investors miss.
8 min readCash-on-cash vs IRR: which one tells the truth?
Cash-on-cash and IRR are both return metrics, but they answer completely different questions. When each one is right, when each one lies, and which to trust.
7 min readHow to calculate NOI (net operating income) on a rental property (2026)
NOI = effective gross income minus operating expenses, before the mortgage — and it's the number cap rate, DSCR, and 5+ unit valuation are all built on. The formula, a full line-by-line $250K duplex example, the CapEx classification trap that swings the cap rate a full point, and the three ways people get NOI wrong.
10 min readGross rent multiplier (GRM) explained: how to screen rentals fast (2026)
GRM = price ÷ annual gross rent — the fastest screen in real estate and the first number to compute on any listing. The formula, a three-listing screen, the cap-rate bridge ((1 − expense ratio) ÷ GRM), how it maps to the 1% rule, and two $250K duplexes with identical GRMs that cash flow +$365 and −$155.
10 min readHow to read a rental property pro forma (and the 7 lies inside most of them)
A pro forma is a seller's projection of how a rental property will perform — and it's almost always optimistic. Here's how to translate seller pro formas into real numbers, and the 7 line items most pro formas understate.
9 min readHow to spot a bad rental deal in 60 seconds — 7 red flags
Seven red flags that tell you a rental doesn't pencil — before you waste hours running the full underwrite. The triage every experienced investor does in their head.
8 min readThe 50% rule for rentals — is it still useful in 2026?
The classic 50% rule says operating expenses run ~half of gross rent. Honest take on when it works as a triage tool, when it lies, and what to use instead.
6 min readVacancy rate for rentals: what to assume in 2026 (and why 5% is usually a guess)
Physical vs economic vacancy, the turnover math that derives the number instead of guessing it, what 5 points does to cash flow and DSCR, and why your DSCR lender ignores vacancy entirely.
10 min readCapEx and maintenance reserves: how much to actually budget for a rental (2026)
Percent-of-rent defaults understate capex on exactly the properties that can least afford it. The component-lifespan method with 2026 prices, an age-weighted reserve formula, and what honest reserves do to NOI, DSCR, and cash flow on a $220K rental.
10 min readRental property insurance: landlord coverage and cost in 2026
The most-underestimated line in a 2026 underwrite. Landlord (DP-3) vs homeowners coverage, what loss-of-rent actually protects, real 2026 cost ranges (~$1,200–$1,900 and climbing), how to estimate it before you have a quote, and how a $1,500-vs-$3,500 premium swings cash flow ~$167/month and drags DSCR below the line.
11 min readCalculators for this
Cap Rate Calculator
Capitalization rate from price, rent, and operating expenses.
Cash-on-Cash Return Calculator
Return on the actual cash invested in a rental.
NOI Calculator
Net Operating Income with every common operating-expense category.
DSCR Calculator
Debt Service Coverage Ratio — the metric every investment-property lender uses.
Gross Rent Multiplier (GRM) Calculator
The 10-second screening ratio for triaging rental deals.
1% Rule Calculator
Pass/fail rental screening filter in 5 seconds.
Run a real deal
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