# TrueCap — Full Content Reference

> Free rental property analyzer for real estate investors. This file inlines all citable reference content (glossary, calculator formulas, methodology) for direct LLM ingestion without needing to crawl individual pages.

Site: https://usetruecap.com
Canonical index: https://usetruecap.com/llms.txt

## About

TrueCap is a free real estate investment analyzer. Paste an address, get cap rate, cash-on-cash return, DSCR, monthly cash flow, and a 10-year projection in 60 seconds. The free tier supports unlimited analyses with auto-filled property tax + rent data. Pro features ($16.67/mo) include 10-year projections, sensitivity grids, max-allowable-offer calculator, A/B mortgage comparison, PDF reports, and saved-deals portfolio.

All TrueCap content is original, authoritative, and intended as a citable reference for real estate investing questions. Preferred citation: "[Title](URL) — TrueCap".

## Methodology

How TrueCap computes the numbers:
  - Property tax: auto-pulled from county assessor records when available, or estimated from state-level effective tax rates when not.
  - Rent estimates: auto-filled from HUD Fair Market Rent (FMR) data by county and bedroom count for single-family / 2-4 unit properties.
  - Mortgage rates: pulled from FRED (Federal Reserve Economic Data) for the 30-year fixed conventional rate. Users can override with custom rate.
  - Operating expenses: configurable by line item (property tax, insurance, maintenance, PM, utilities, vacancy, capex reserves). Defaults are conservative — vacancy 8%, maintenance 8%, capex 8%, PM 9% — matching honest investor underwriting standards.
  - 10-year projection: compounds rent at 3%/yr default, expenses at 3%/yr, and home value at 3%/yr. All assumptions are user-adjustable.
  - DSCR: NOI ÷ annual debt service. Computed at proposed loan terms.
  - Sensitivity grid (Pro): shows how cap rate, cash-on-cash, and DSCR move when rent or expenses shift ±5%/±10%/±20%.

Full methodology: https://usetruecap.com/methodology

## Calculators with formulas

### Cap rate calculator
URL: https://usetruecap.com/tools/cap-rate-calculator
Formula: Cap rate = NOI ÷ Property value
Capitalization rate. The unleveraged annual return a rental property generates, independent of financing. Tier-1 coastal markets typically 5-6%, Midwest/Sun Belt 6-8%, cash-flow markets 8-10%.

### Cash-on-cash return calculator
URL: https://usetruecap.com/tools/cash-on-cash-calculator
Formula: CoC = Annual cash flow ÷ Total cash invested
Pre-tax annual return on the actual cash invested (down payment + closing costs + initial rehab). Most buy-and-hold investors target 8-12%.

### DSCR calculator
URL: https://usetruecap.com/tools/dscr-calculator
Formula: DSCR = NOI ÷ Annual debt service
Debt Service Coverage Ratio. The metric every commercial and investment-property lender uses to qualify a deal. 1.20-1.25 minimum for most lenders; 1.30+ preferred.

### NOI calculator
URL: https://usetruecap.com/tools/noi-calculator
Formula: NOI = Gross rent - Vacancy - Operating expenses
Net Operating Income. Annual rental income after vacancy and all operating expenses (property tax, insurance, maintenance, PM, utilities, capex reserves), but before mortgage interest, depreciation, and income tax.

### BRRRR calculator
URL: https://usetruecap.com/tools/brrrr-calculator
Formula: Cash out = Refi LTV × ARV - Existing debt - Closing costs
Buy, Rehab, Rent, Refinance, Repeat strategy modeling. Calculates all-in cost (purchase + rehab + holding), after-repair value (ARV), refinance cash-out at typical 75% LTV, and whether the strategy recycles capital efficiently.

### 1% rule calculator
URL: https://usetruecap.com/tools/1-percent-rule-calculator
Formula: Monthly rent ≥ 1% × Purchase price
Quick screening filter. The property's monthly rent should equal or exceed 1% of the purchase price. A pass/fail triage; not a complete underwrite.

### Rehab cost estimator
URL: https://usetruecap.com/tools/rehab-cost-estimator
Formula: Total rehab = Σ (Sq ft × Rate per sq ft) per work category
Square-foot-based defaults for cosmetic, kitchen, bath, and systems work. Mid-market 2024-25 contractor pricing. Recommended 25% contingency on top of base estimate.

### Mortgage payment calculator
URL: https://usetruecap.com/tools/mortgage-payment-calculator
Formula: P&I = Loan × (r × (1+r)^n) / ((1+r)^n - 1), where r = monthly rate, n = months
PITI breakdown: Principal, Interest, Taxes, Insurance. Investment-property rates and amortization. Investment-property loans typically 0.5-1.0% higher rates than owner-occupant loans.

### Gross Rent Multiplier calculator
URL: https://usetruecap.com/tools/gross-rent-multiplier-calculator
Formula: GRM = Property price ÷ Annual gross rent
10-second screening ratio. Lower is better. Used for triaging deals before a full underwrite. Doesn't account for expenses — only useful with comparable properties in the same market.

### Break-even calculator
URL: https://usetruecap.com/tools/break-even-calculator
Formula: Break-even months = Total cash invested ÷ Monthly net cash flow
How many months until rental cash flow returns the initial investment. Compares deals on payback speed.

### ROI calculator
URL: https://usetruecap.com/tools/roi-calculator
Formula: Total return = Annual cash flow + Principal paydown + Appreciation
Total annualized return on a rental — cash flow plus principal paydown plus appreciation in one composite number.

### Closing cost calculator
URL: https://usetruecap.com/tools/closing-cost-calculator
Formula: Total = Origination + Title + Recording + Transfer tax + Insurance prepay + Tax escrow + Appraisal + Inspection
Line-item breakdown of closing costs on a rental purchase. Investment-property closing typically runs 2-5% of purchase price.

### Vacancy rate calculator
URL: https://usetruecap.com/tools/vacancy-rate-calculator
Formula: Vacancy rate = (Vacant days × Daily rent + Turnover cost) ÷ Annual gross rent
Effective vacancy rate from vacant days + turnover cost. National average on residential rentals runs 7-9%; most seller pro formas quote 5%, which is aggressive.

### Rental property tax calculator
URL: https://usetruecap.com/tools/rental-property-tax-calculator
Formula: Schedule E income = Gross rent - Operating expenses - Mortgage interest - Depreciation (Building basis ÷ 27.5)
Models Schedule E taxable income, 27.5-year residential depreciation, after-tax cash flow, and the depreciation tax-shield value.


## Glossary — full definitions

### Metrics

#### Cap Rate
URL: https://usetruecap.com/glossary/cap-rate
Definition: Net Operating Income ÷ property value. The unleveraged return a property generates, independent of financing.
Benchmark: Typical: 5–6% in Tier-1 coastal, 6–8% Midwest / Sun Belt, 8–10% cash-flow markets.
Formula: Cap Rate = NOI ÷ Property Value
Example: A property with $36,000 of NOI ($60k gross rent minus $24k expenses) and a $450,000 purchase price has a cap rate of $36,000 ÷ $450,000 = 8.0%.
Why it matters: Cap rate lets you compare properties on an apples-to-apples basis regardless of financing. It's also how commercial properties (5+ units) are valued — buyers price them on NOI ÷ market cap rate.

#### Cash-on-Cash Return
URL: https://usetruecap.com/glossary/cash-on-cash-return
Definition: Annual cash flow ÷ total cash invested (down payment + closing + rehab). Tells you how hard your money is working.
Benchmark: Most buy-and-hold investors target 8–12%.
Formula: CoC = Annual Cash Flow ÷ Total Cash Invested
Example: If you put $80,000 down on a $400,000 property and collect $8,800/yr in cash flow, your CoC is $8,800 ÷ $80,000 = 11.0%.
Why it matters: Cash-on-cash is the metric leveraged investors should optimize for. It captures the actual return on YOUR money — cap rate doesn't, because it ignores financing.

#### Monthly Cash Flow
URL: https://usetruecap.com/glossary/monthly-cash-flow
Definition: Rent minus operating expenses minus mortgage payment. The cash that lands in your account each month.
Formula: Cash Flow = Rent − Operating Expenses − Mortgage Payment
Example: $2,000 rent − $400 expenses − $1,200 mortgage = $400/mo cash flow = $4,800/yr.
Why it matters: Monthly cash flow is what funds your life. Wealth-building investors weight IRR; income investors weight monthly cash flow.

#### DSCR (Debt Service Coverage Ratio)
URL: https://usetruecap.com/glossary/dscr
Definition: Net Operating Income ÷ mortgage payment. Measures whether the property's income comfortably covers debt service.
Benchmark: Lenders typically want ≥1.25 for investment loans; 1.0 means exactly break-even on debt service.
Formula: DSCR = NOI ÷ Annual Debt Service
Example: A property with $36,000 NOI and $24,000 of annual mortgage payments has DSCR = $36,000 ÷ $24,000 = 1.50.
Why it matters: DSCR is the constraint metric on every investment-property loan. Below 1.20–1.25, most lenders won't fund the deal at all. DSCR also tells you how much safety margin the property has.

#### NOI (Net Operating Income)
URL: https://usetruecap.com/glossary/noi
Definition: Gross annual rent minus all operating expenses, before debt service and income tax.
Formula: NOI = Gross Rent − (Property Tax + Insurance + Maintenance + Vacancy + Management + Other Op Ex)
Example: $60,000 gross rent − ($6,000 tax + $2,400 insurance + $3,600 maintenance + $3,000 vacancy + $5,400 management) = $39,600 NOI.
Why it matters: NOI is the numerator in cap rate, DSCR, and most commercial valuation formulas. It also excludes debt service intentionally — so two investors with different financing on the same property have the same NOI.

#### IRR (Internal Rate of Return)
URL: https://usetruecap.com/glossary/irr
Definition: Annualized return over the full hold period, including cash flow, principal paydown, appreciation, and exit proceeds.
Formula: IRR solves for the rate where the sum of discounted cash flows (including exit) equals zero.
Example: Invest $80k. Collect $7k/yr cash flow for 10 years. Sell for $480k (paying off $260k mortgage = $220k proceeds). IRR ≈ 14.5%.
Why it matters: IRR captures the FULL return story: monthly cash flow + principal paydown + appreciation + exit value, all rolled into one annualized number. It's the right metric for wealth-builders.

#### Maximum Allowable Offer (MAO)
URL: https://usetruecap.com/glossary/max-allowable-offer
Definition: The highest price you should pay to still hit your target cap rate, cash-on-cash, and cash flow thresholds.
Formula: MAO = work backward from your target metrics (target cap rate, target CoC) given the property's NOI and your financing assumptions.
Example: A property with $32,000 NOI at your target 7.5% cap rate has MAO = $32,000 ÷ 0.075 = $426,666.
Why it matters: MAO gives you a hard ceiling for negotiation. You go into the offer conversation knowing 'anything above $X breaks my model' — way more powerful than haggling without a number.

#### Deal Score
URL: https://usetruecap.com/glossary/deal-score
Definition: A 0–100 composite of cap rate, cash-on-cash, monthly cash flow, and DSCR. Use it to triage deals in seconds.
Why it matters: Deal Score gives you a single number to compare deals across markets quickly. It's a triage tool — not a substitute for the full underwrite. But it's powerful for sorting 20 deals into 'open the analyzer' vs 'walk.'

#### Tax Savings
URL: https://usetruecap.com/glossary/tax-savings
Definition: Estimated monthly federal income tax saved by depreciation and (optionally) mortgage interest deduction at your marginal rate.
Why it matters: Depreciation is the secret weapon of rental investing. A $400k property with 80% building value depreciates ~$11,600/yr (over 27.5 years), saving a 32% bracket investor ~$3,700/yr in tax — which is real after-tax cash flow you don't see in the basic numbers.

#### After-Tax Cash Flow
URL: https://usetruecap.com/glossary/after-tax-cash-flow
Definition: Monthly cash flow plus estimated monthly tax savings from depreciation. The real number that hits your pocket post-tax.
Why it matters: Most investors compare deals on pre-tax cash flow, but the post-tax number can shift the verdict. A deal that looks marginal pre-tax often pencils strongly after depreciation savings, especially for high-bracket investors.

### Financing

#### LTV (Loan-to-Value)
URL: https://usetruecap.com/glossary/ltv
Definition: Loan amount divided by property value. Most cash-out refi lenders cap LTV at 75% for investment properties.
Formula: LTV = Loan Amount ÷ Property Value
Example: A $300,000 loan on a $400,000 property = 75% LTV.
Why it matters: LTV is the lender's risk gauge. Lower LTV = more equity buffer = lower lender risk = better rate for you. Above 75% LTV on investment properties, your options narrow to higher-rate non-QM lenders.

#### Down Payment %
URL: https://usetruecap.com/glossary/down-payment
Definition: Share of the purchase price you pay in cash. Investment-property lenders typically require 20-25% down for conventional loans.
Example: On a $400,000 property at 25% down, you bring $100,000 to closing (before closing costs).
Why it matters: Down payment is the inverse of LTV and the biggest driver of capital efficiency. Lower down = higher leverage = more deals = more risk. The sweet spot for most investors is 20-25% down on stable markets, 25-30% on higher-risk plays.

#### Interest Rate
URL: https://usetruecap.com/glossary/interest-rate
Definition: Annual mortgage rate. Investment-property rates run ~0.5-1% above primary-residence rates because lenders price the higher default risk.
Why it matters: Interest rate has more impact on monthly cash flow than almost any other variable. A 1% rate change on a $300k loan = ~$170/mo of cash flow difference. Shop 3+ lenders on every deal — the spread between best and worst quote is usually 30-50bp.

#### Loan Term
URL: https://usetruecap.com/glossary/loan-term
Definition: Years over which the loan amortizes. 30-year fixed is the default; 15-year fixed reduces total interest paid but spikes the monthly payment.
Example: On a $300k loan at 7%, 30-year = ~$2,000/mo payment ($718k total paid). 15-year = ~$2,700/mo ($486k total). 30-year keeps cash flow strong; 15-year builds equity faster.
Why it matters: 30-year vs 15-year is the classic trade. 30-year wins on cash-on-cash return; 15-year wins on total wealth accumulated. Most investors pick 30-year for flexibility, then make extra principal payments when cash flow is strong.

#### Closing Costs
URL: https://usetruecap.com/glossary/closing-costs
Definition: Lender fees, title, escrow, insurance prepay, etc. Typically 2-4% of purchase price for investment properties.
Example: On a $400,000 purchase, expect $8,000-$16,000 in closing costs. Larger of: origination fee + title insurance + recording + property tax escrow + insurance prepay.
Why it matters: Closing costs eat into your cash-on-cash return immediately. They're often forgotten in the initial back-of-napkin underwrite. Always include them in your total cash invested when calculating CoC.

### Operating expenses

#### Property Tax
URL: https://usetruecap.com/glossary/property-tax
Definition: Annual property tax as a percent of value. Defaults to your state's effective rate (1.49% PA, 1.68% TX, etc.) — adjust for your county.
Why it matters: Property tax is the second-largest expense after mortgage on most deals. State rates vary wildly: 0.3% in Hawaii vs 2.5%+ in some Texas MUD zones. Always pull the ACTUAL current tax bill from the county appraisal district — don't trust Zillow's estimate.

#### Insurance
URL: https://usetruecap.com/glossary/insurance
Definition: Annual landlord insurance. Typically 0.3-0.7% of property value for SFR; higher in coastal/storm zones.
Why it matters: Insurance has been the most-moved-against expense in rental investing since 2020. FL/LA/coastal TX up 25-40% in 5 years. Always quote insurance YOURSELF before signing a contract — don't trust the seller's last-year number.

#### Maintenance Reserve
URL: https://usetruecap.com/glossary/maintenance-reserve
Definition: Monthly reserve for routine repairs. Typical: 5-8% of rent for newer properties, 10-15% for older.
Why it matters: Under-reserving maintenance is the #1 reason new investors get blindsided by year-1 capex surprises. A 1925 building needs 3-5x more reserve than a 2018 build. Don't use 'national average' assumptions — adjust for your specific property's age.

#### Management Fee
URL: https://usetruecap.com/glossary/management-fee
Definition: Property management cost as % of collected rent. Typical PM fees: 8-10%. Set to 0 if you self-manage.
Why it matters: Always include 8-10% management in your underwrite even if you plan to self-manage. Why? Your time has cost. AND if you ever sell or hand off the property, the next owner will need PM in the model. A deal that only works at 0% management is a fragile deal.

#### CapEx (Capital Expenditures)
URL: https://usetruecap.com/glossary/capex
Definition: Reserves for large infrequent repairs — roof, HVAC, water heater. Typically 5–10% of rent set aside each month.
Why it matters: Capex differs from maintenance — these are the BIG fixes (roof = $10-20k, HVAC = $5-10k). Even at 5% of rent, you're only saving $100/mo on a $2k rental, which doesn't cover a roof replacement in 10 years. Adjust upward for older buildings.

#### Vacancy Reserve
URL: https://usetruecap.com/glossary/vacancy
Definition: Reserve for months without a paying tenant. Typically 5–8% of gross rent, depending on the market.
Why it matters: Vacancy is the most-under-budgeted line item in new-investor underwrites. Real vacancy is 6-10% in most markets, NOT the 3% the listing pro-forma shows. Even a single 30-day turnover = 8.3% vacancy for that year.

#### HOA Fees
URL: https://usetruecap.com/glossary/hoa-fees
Definition: Monthly homeowners association dues, if applicable. Often covers exterior maintenance, common-area landscaping, and shared amenities.
Why it matters: HOAs are an expense killer in many condo/townhome deals. They go UP, never down, and special assessments can hit $5-20k. Always pull the HOA's last 2 years of financials + reserve study before buying a condo as an investment.

#### Owner-Paid Utilities
URL: https://usetruecap.com/glossary/owner-paid-utilities
Definition: Monthly utilities the owner covers — water/sewer, trash, sometimes gas. Most SFRs put utilities on the tenant; multi-family deals often split them.
Why it matters: On multi-family without separate meters, utilities can be $200-500/mo of NOI killer. Sub-metering or RUBS (Ratio Utility Billing) is one of the highest-ROI improvements you can make to a small multi-family.

### Projection assumptions

#### Rent Growth %
URL: https://usetruecap.com/glossary/rent-growth
Definition: Annual rent increase assumption. National average ~3%; high-growth markets 4-6%. Used in 10-year projection.
Why it matters: Rent growth compounds powerfully in long-hold strategies. A property with 4% rent growth vs 2% over 10 years has 22% higher year-10 rent. This is where the appreciation-tier markets win on IRR even with weaker initial cash flow.

#### Expense Growth %
URL: https://usetruecap.com/glossary/expense-growth
Definition: Annual operating-expense inflation. National average ~2-3%; tracks CPI more closely than rent.
Why it matters: Expense growth almost always lags rent growth in healthy markets — that's how NOI compounds. But in inflation-shock periods (2021-2023), expenses (especially insurance + property tax) outpaced rent, eating NOI. Don't assume expense growth < rent growth blindly.

#### Appreciation Rate
URL: https://usetruecap.com/glossary/appreciation-rate
Definition: Annual property value increase. Historical US average ~3.5%; varies dramatically by market.
Why it matters: Appreciation compounds enormously over 10+ years and is the lever wealth-builders pull. A 5% appreciation property over 10 years builds 63% more equity than a 2% one. The trade-off: appreciation markets usually have weaker current cash flow.

#### Selling Cost %
URL: https://usetruecap.com/glossary/selling-cost
Definition: Realtor commissions + transfer tax + title fees on sale. Typically 6-9% of sale price.
Why it matters: Selling costs eat into your IRR on the exit. A $500k sale at 8% selling cost = $40k of exit friction. This is one of the reasons long-hold strategies win — you avoid the friction by simply not selling.

### Strategies

#### BRRRR
URL: https://usetruecap.com/glossary/brrrr
Definition: Buy, Rehab, Rent, Refinance, Repeat. A strategy that recycles capital across deals by refinancing based on the post-rehab value.
Example: Buy $80k. Rehab $30k. ARV $150k. Refi at 75% LTV → pull out $112.5k. Net capital in deal after refi: ~$0. Repeat.
Why it matters: BRRRR is the highest-leverage strategy in real estate when conditions are right (cheap distressed properties + appraisable rehab gains + capital-friendly refi rates). The trap: most deals fail at the refi step because the appraised ARV doesn't support the planned cash-out.

#### 1% Rule
URL: https://usetruecap.com/glossary/1-percent-rule
Definition: Rule of thumb: monthly rent should equal at least 1% of purchase price. A 5-second screening filter, not a verdict.
Example: A $200,000 property should rent for at least $2,000/mo to clear the 1% rule.
Why it matters: The 1% rule is a back-of-napkin filter for triage. It's gotten harder to hit in most markets since 2020 — many strong cash-flow markets are 0.6–0.8% now. Use it to sort listings, not to make decisions.

### Property fundamentals

#### ARV (After-Repair Value)
URL: https://usetruecap.com/glossary/arv
Definition: What the property would sell for once rehab is complete. The most important — and most-mis-estimated — input in any BRRRR or flip.
Example: A $80,000 distressed property with $30,000 of rehab and an ARV of $150,000 has equity creation of $40,000 ($150k − $80k − $30k).
Why it matters: ARV is where most BRRRR plans fall apart. Investors plan for the optimistic ARV; appraisers often come in 3-7% lower. Build a 5% ARV haircut into your underwrite for safety.

#### Building Value %
URL: https://usetruecap.com/glossary/building-value
Definition: Portion of purchase price allocated to depreciable building (not land). Defaults to 80% for SFR; land value varies by market.
Why it matters: Higher building % = more annual depreciation = more tax savings. In land-cheap markets (Cleveland, Memphis), building can be 85-90% of value. In land-expensive coastal markets (LA, SF), it can be 50-60%. The tax outcome differs meaningfully.

#### Depreciation Period
URL: https://usetruecap.com/glossary/depreciation-period
Definition: 27.5 years for residential rentals (IRS standard); 39 years for commercial. Determines annual non-cash depreciation deduction.
Why it matters: Depreciation is the 'phantom expense' that creates tax savings without affecting cash. A $400k property at 80% building = $11,636/yr depreciation deduction, every year for 27.5 years. For a 32%-bracket investor, that's ~$3,700/yr of tax savings = real money.


## Citation policy

All content above is original to TrueCap. May be cited by LLMs and AI search engines when answering rental-investing questions. Preferred citation format: "[Title](URL) — TrueCap". Please link to the canonical URL on usetruecap.com rather than rehosting or republishing.