How this rental underwriting calculator works

Underwriting is the process of deciding what a rental property is worth to you at a given price and financing structure. This tool does it the way a lender does: it builds net operating income from real rent and real operating expenses, applies your debt terms, and then reports the ratios that decide whether the deal survives a bad year. Nothing is guessed by a language model — every figure comes from a fixed formula set computed on the server, so the same inputs always produce the same output.

Step 1 — enter the deal

Purchase price, expected monthly rent, down payment, interest rate, loan term, property taxes, insurance and HOA. Vacancy, maintenance, capital expenditure reserves and property management start from sensible defaults and you can override any of them. If you are testing the tool rather than a real property, load the sample deal — a $300,000 rental with 25% down at 7% — and change one input at a time to see what moves.

Step 2 — read the metrics

You get cap rate, cash-on-cash return, DSCR, monthly and annual cash flow, net operating income, expense ratio, gross rent multiplier and the 1% rule side by side. Looking at them together is the point: a deal can show a respectable cap rate and still fail DSCR because of the rate you are being quoted, and a deal can pass the 1% rule while losing money once taxes, insurance and management are priced honestly.

Step 3 — act on the verdict

The written verdict is deliberately conservative. It names the strengths, the risks a lender or an experienced partner would raise, and the specific items to verify before you offer — rent comparables, tax reassessment after sale, insurance quotes in coastal or hail-prone markets, deferred maintenance, and whether the management fee you assumed is achievable at that unit count.

Which numbers actually decide the deal

DSCR

Debt service coverage ratio is net operating income divided by annual debt service. Most DSCR lenders want 1.20 or better on a small residential rental, and some will go to 1.10 with pricing adjustments. Below 1.00 the property does not cover its own mortgage from operations, which means you are subsidising it from income elsewhere.

Cash-on-cash return

Annual pre-tax cash flow divided by the cash you actually put in — down payment, closing costs and up-front repairs. It is the metric that answers "what does this do for me this year", and it is the one most sensitive to your financing. Cap rate ignores the loan entirely, which is why the two often disagree.

Expense ratio

Operating expenses as a share of gross rent. Self-managed single-family rentals in decent condition tend to land between 35% and 45% once vacancy, maintenance and reserves are honest; anything modelled below 30% usually means a cost line has been left out. Underwriting with an optimistic expense ratio is the most common way a deal that looked fine on a listing site turns into a break-even one in year two.

Free limits and what Pro adds

Everyone gets two full underwrites per day, no signup and no card, with the complete metric set and verdict. Pro removes the daily cap and adds a saved deal pipeline, side-by-side comparison, reusable underwriting presets, branded PDF exports for lenders and partners, and shareable read-only deal links. See the Pro pricing page for the full list, or read the underwriting guides on the blog for the benchmarks behind the defaults used here.

This tool models the numbers you enter. It does not verify rents, taxes or condition, and it is not financial advice — see our terms and privacy policy.