Rental Property Numbers Worked: Six Deals From Rent Roll to Cash-on-Cash
Six worked rental property analyses with full arithmetic: a financed single-family buy, a cap-rate comparison, the 50% rule screen, 1% rule checks, a sensitivity stress test, and total-return thinking.
Rental analysis is best learned by watching complete examples — every line item and rounding decision in the open — so this page runs six properties in full. The scenarios are the ones that matter in practice: a financed purchase analyzed line by line, two properties compared on cap rate, the 50 percent rule as a ten-second screen, the 1 percent rule applied and interrogated, a stress test showing how quickly thin deals break, and a total-return view adding amortization to cash flow. Figures are illustrative — markets, taxes, insurance, and lender terms vary — and nothing here is investment or tax advice. Run your own candidates at /rental-property-roi-calculator.html to turn these templates into decisions. Notice how often the honest answer is a range, and how often a deal survives or dies on one omitted expense line.
CHAPTER 01The Case Study House: $180,000 Renting for $1,800
Our workhorse property: a single-family rental priced at $180,000 that should rent for $1,800 monthly — exactly a 1.0 ratio on the 1% rule. Annual gross scheduled rent is $21,600. Assume 5 percent vacancy and credit loss: $1,080, leaving effective gross income of $20,520. Operating expenses: property taxes $2,400, insurance $1,100, maintenance and repairs $1,500, and management at 8 percent of scheduled rent ($1,728). Total operating expenses: $6,728 — about 33 percent of gross.
NOI is $20,520 minus $6,728, which is $13,792. Against the $180,000 price, that is a 7.7 percent cap rate. Already the numbers are telling a story: expenses at a third of gross, a cap rate in the range modest single-family rentals in many secondary markets get discussed in, and a 1% screen that passed. Now the financing layer decides whether the deal is actually good.
CHAPTER 02Scenario 1: Financing the Case Study Property
Terms: 25 percent down, which is $45,000; closing costs around $4,000; immediate make-ready of $6,000. Total cash invested: $55,000. Loan: $135,000 at 7 percent for 30 years. The standard amortization formula gives a principal-and-interest payment of about $898 monthly — call it $10,777 per year.
Cash flow is NOI minus debt service: $13,792 minus $10,777, about $3,015 per year, or roughly $251 a month. Cash-on-cash return is $3,015 divided by $55,000, about 5.5 percent. Read that result correctly: it is a genuinely positive, genuinely unexciting first-year yield — and it omits roughly $1,300-1,400 of principal the loan amortizes in year one (the payment starts near $788 interest and $110 principal), plus whatever appreciation and tax benefits apply. The all-in story is better than the cash story; the cash story is the one that must survive on its own.
CHAPTER 03Scenario 2: Comparing Two Properties on Cap Rate Alone
Property B: $250,000, renting for $2,200 monthly. Gross is $26,400; at 5 percent vacancy, effective income is $25,080. Expenses: taxes $3,600, insurance $1,200, maintenance $1,800, management 8 percent ($2,112) — total $8,712. NOI is $16,368, and against $250,000 that is a 6.5 percent cap.
Against our case study's 7.7 percent cap, Property B looks overpriced for its rent — and that comparison is exactly what cap rate is for, because it ignores financing entirely. But note the honest caveats before acting: Property B might sit in a better school district with lower vacancy risk, newer systems with thinner capex, or stronger rent growth. Cap rate is the start of the comparison conversation, not the verdict; it tells you the price of each machine, and you still have to ask what each machine is.
CHAPTER 04Scenario 3: The 50 Percent Rule as a Ten-Second Screen
The 50 percent rule says operating expenses (everything except the mortgage) tend to consume roughly half of gross rent over time. Take a listing at $1,500 monthly rent: NOI estimate is roughly $9,000 per year. At a $150,000 price, that is a 6.0 percent implied cap — instantly, with three numbers.
The screen earns its keep by being pessimistic and fast. Our case study's actual expense load came to 33 percent of gross, so the 50 percent rule would call its NOI $10,800 and its cap 6.0 — deliberately harsher than the line-item build. Using both on every deal is the professional habit: the heuristic catches optimistic spreadsheets, the line items catch the heuristic's blind spots, and when they disagree by a lot, the discrepancy itself is information about which expense assumptions need a phone call to verify.
CHAPTER 05Scenario 4: The 1% Rule, Applied and Interrogated
Listing A: $140,000, expected rent $1,350 — a 0.96 ratio, technically a pass. Listing B: $300,000, expected rent $2,100 — a 0.70 ratio, a clear fail. The rule's verdicts are instant: A goes into underwriting, B needs a reason to exist (appreciation-heavy market, short-term rental potential, house-hacking) or it dies here.
Now interrogate the pass. Listing A's 0.96 says nothing about its $4,200 annual property tax bill versus a comparable house at $2,400, its insurance climate, or whether the neighborhood's real vacancy is 5 percent or 15. Meanwhile, B's 0.70 could still be a fine buy in a market where rents grow 5 percent a year and you plan to hold for two decades. The rule triages; it does not decide. That is precisely why the calculator at /rental-property-roi-calculator.html exists for everything the bouncer lets through the door.
CHAPTER 06Scenario 5: Stress-Testing the Case Study
Take the financed case study — $13,792 NOI, $10,777 debt service, about $3,015 cash flow — and make the year ordinary. Vacancy doubles to 10 percent: effective income drops to $19,440, NOI falls to $12,712, cash flow thins to about $1,935. Now add one bad-luck capex year — a water heater and an HVAC repair, say $2,500 from reserves: cash flow goes slightly negative, roughly negative $565 on paper, offset by the reserve fund you were wise enough to build.
This is what a pass looks like. The deal wobbles but does not bleed unbounded, the reserve absorbs the capex hit, and the mortgage still gets paid by the property in a below-average year. Run the same stress on a deal with a 0.6 rent ratio and 60 percent expenses and watch it produce a four-figure annual loss before the first hot water heater dies — which is the entire value of stress-testing: it converts surprises into line items while the only thing at risk is a Saturday afternoon.
CHAPTER 07Scenario 6: Total Return — Adding What Cash Flow Forgets
Stack the case study's return sources for year one. Cash flow: about $3,015. Principal paydown: roughly $1,300-1,400. Appreciation: unknowable — model a range, say 0 to 3 percent of $180,000, which is $0 to $5,400, and treat the high end as hope rather than plan. Tax effects: depreciation often shelters part of the cash flow for many owners, but rules, brackets, and eventual recapture are individual — a conversation for your tax professional, not a blog formula.
On the $55,000 invested, the conservative stack — cash flow plus amortization, zero appreciation — is about $4,300-4,400, or roughly 7.9 percent before taxes, versus the 5.5 percent cash-on-cash. That gap is the amortization dividend: the tenant retiring your debt is a real, non-speculative return. The full stack also clarifies the risk hierarchy — cash flow and amortization are contractual, appreciation is not — which is why underwriting that requires appreciation to work is underwriting that has already failed.
CHAPTER 08Reading Across the Six Scenarios
The patterns repeat on purpose. Every scenario begins with the same four income and expense lines; every ratio is one division away from NOI; every stress test is the same numbers with one input worsened. Rental analysis looks complex from the outside and is actually a short spreadsheet run five times with different assumptions — the craft is in honest inputs, not exotic math.
The second repeated lesson is that ratios answer different questions and must not be cross-examined: 1% screens listings, cap rate prices machines, cash-on-cash grades your wiring of money, total return grades the decade. Keep each in its lane, keep your expense assumptions honest, and re-run everything at /rental-property-roi-calculator.html when the inputs change — which in real life is every year, whether you touch the spreadsheet or not.
🔑 Key takeaways
- The workhorse case: $180,000, $1,800 rent, 5% vacancy, $6,728 expenses, $13,792 NOI — a 7.7% cap.
- Financed at 25% down, $135,000 at 7%: ~$898/month payment, ~$3,015 cash flow, ~5.5% cash-on-cash on $55,000 invested.
- Cap-rate comparisons (7.7% vs 6.5%) price machines but say nothing about tenant quality, capex age, or rent growth.
- The 50% rule is a deliberately pessimistic screen: $1,500 rent implies ~$9,000 NOI and a 6.0% cap at $150,000.
- The 1% rule triages (0.96 passes, 0.70 fails) but underwriting still has to verify taxes, insurance, and real vacancy.
- Stress tests turn surprises into line items: doubled vacancy plus one $2,500 capex year should wobble, not sink, a good deal.
- Add amortization to the story: year-one principal of ~$1,300-1,400 lifts the conservative total return to ~7.9% before taxes.
❓ Frequently asked questions
How do you calculate cash-on-cash return step by step?
Build NOI (gross rent minus vacancy minus operating expenses), subtract annual debt service to get pre-tax cash flow, then divide by total cash invested — down payment, closing costs, and immediate repairs. In the case study: ($13,792 - $10,777) / $55,000 = about 5.5 percent.
What NOI would $1,500 rent produce under the 50% rule?
Roughly $750 per month, or $9,000 per year, since the rule assumes operating expenses consume about half of gross rent. Against a $150,000 purchase price, that implies about a 6.0 percent cap rate — a fast, deliberately conservative screen to check line-item analyses against.
Is a 7.7% cap rate good?
It is solid for many modest single-family markets and unremarkable for parts of the Midwest or overpriced for premium metros — the number only means something against local prevailing caps, your financing cost, and the asset's risk. A 7.7% cap financed at 7% leaves a thin positive spread; financed cheaper, it compounds nicely.
How much cash do I need for a $180,000 rental?
With conventional investor financing, 20-25 percent down is common: $36,000-45,000, plus closing costs of a few thousand and a make-ready budget. The case study used $55,000 all-in. Cash purchases skip the loan but tie up the full price — and change which ratios matter, since cash-on-cash collapses toward cap rate.
What cash flow should I expect per door?
There is no universal figure — it scales with price, rate, and expense load. The case study produced about $251 monthly per door in year one, which is realistic for a financed 1%-ratio property at 7 percent rates. Deals promising triple that on financed purchases usually have an optimistic expense line somewhere.
Do these examples include taxes and depreciation?
No — all figures are pre-tax, deliberately. Depreciation often shelters part of rental cash flow for many owners, but brackets, passive-loss rules, and recapture at sale make it individual. Run your specific situation with a tax professional, and treat every pre-tax number here as the input to that conversation, not its conclusion.
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