Question 1

How do you calculate cash-on-cash return for a rental property?

Accepted Answer

Divide annual pre-tax cash flow by total cash invested. If you invest $50,000 (down payment plus closing costs) and the property generates $5,000 per year in net cash flow, your cash-on-cash return is 10%.

Question 2

What is a good cap rate for a rental property?

Accepted Answer

Cap rates vary by market and property type. In major cities, 4-6% is common. In secondary markets, 6-10% is typical. A higher cap rate implies higher risk and potentially higher returns. Compare cap rates within the same market and property class.

Question 3

What expenses should I include in rental property analysis?

Accepted Answer

Include mortgage payment, property taxes, insurance, property management (8-10% of rent), maintenance (5-10% of rent), vacancy allowance (5-8%), HOA fees, utilities you cover, and capital expenditure reserves for major repairs.

Question 4

What is the 1% rule in real estate investing?

Accepted Answer

The 1% rule says monthly rent should be at least 1% of the purchase price. A $200,000 property should rent for $2,000 or more per month. It is a quick screening tool. Properties that pass often cash flow well, but always run full numbers before buying.

Rental Property Analyzer for Salon

Rental Property Analyzer

Ready to use your real numbers?

More Calculators for Salon Businesses

Rental Property Analyzer for Other Industries

Related Articles