What is a good cash flow on a rental property?

There's no universal number. Many investors look for positive cash flow after realistic reserves for vacancy, repairs, CapEx and management, plus enough cushion to survive a 10% rent drop.

A quick screen: monthly rent at least 1% of the price. The example ($1,900 on $200,000) is 0.95%. Treat it as a filter, not a decision.

Cap rate vs. cash-on-cash: which matters more?

Cap rate measures the property without financing. Cash-on-cash measures your return after the mortgage. Look at both, plus DSCR and a stress test.

How to Analyze a Rental Property: Step-by-Step with a Worked Example

A repeatable way to decide whether a rental is worth an offer, with one worked example carried through every step.

Updated October 2026. General information for US landlords, not tax or legal advice.

The example property

A $200,000 single-family home renting for $1,900 a month. You'd put 25% down ($50,000) and pay $6,000 in closing costs and $4,000 in initial repairs, for $60,000 cash in. The loan is $150,000 at 7% for 30 years.

Step 1: Verify the rent

Use leased comps (not asking rents) for similar units nearby. A rent estimate that's $150 too high can turn a deal from positive to negative.

Step 2: Estimate operating expenses honestly

For the example: vacancy 5% ($95), property taxes $250/mo, insurance $125/mo, repairs 5% ($95), CapEx reserve 5% ($95), management 8% of collected rent ($144.40). Total operating expenses come to $709.40 a month. Include management even if you self-manage, because your time isn't free.

Step 3: NOI and cap rate

NOI = $1,805 effective rent − $709.40 = $1,095.60/mo ($13,147/yr)
Cap rate = $13,147 ÷ $200,000 = 6.57%

Compare the cap rate with recent sales of similar properties (cap rate calculator).

Step 4: Cash flow after the mortgage

P&I on $150,000 at 7%, 30 years = $997.95
Cash flow = $1,095.60 − $997.95 = $97.65/mo ($1,172/yr)

Check it with the cash flow calculator.

Step 5: Return on your cash

Cash-on-cash = $1,172 ÷ $60,000 = 1.95%

That's low as a cash yield. The full return also includes principal paydown and appreciation, which the ROI & IRR calculator projects.

Step 6: Lender view (DSCR)

Many DSCR lenders divide rent by PITIA: $1,900 ÷ ($997.95 + $375) = 1.38×. Using NOI instead, the ratio is 1.10×. Requirements vary by lender (DSCR calculator).

Step 7: Stress-test it

Scenario	Monthly cash flow
Base case	$97.65
Rent 10% lower ($1,710)	−$49.41
Rate 8% instead of 7%	−$5.05

The example only works if rent and rate both hold. That doesn't mean "don't buy", but it does mean the price or terms need to give you more cushion.

Step 8: Compare against alternatives

Run your two or three best candidates through the same steps with the same assumptions, then compare them side by side.

Do all of this in one spreadsheet

The Rental Deal Analyzer ($19, Excel + Google Sheets) runs these steps for buy-and-hold and BRRRR deals. It includes a 10-year projection with IRR, sensitivity tables for rent, rate and price, and a comparison of three deals side by side. For BRRRR deals, also see the BRRRR calculator.

How to analyze a rental property (step by step)