Rental property screening: cash-on-cash after real costs
Gross yield lies. Here is how vacancy, repairs, financing, and taxes change the story—and how to use a calculator as a filter, not a prophecy.
What you’ll learn
This guide now combines stronger visuals, clearer milestones, and a faster scan path so you can find the right insight without reading every paragraph.
In this article
Use the section links below to jump straight to the part of the article that answers your question.
How to decide from here
Every article now pairs stronger examples with clearer next-step guidance so you can move from reading to action faster.
- Scan the headings and charts to find the section that matches your question.
- Compare the examples against your real numbers, then open the linked calculator to personalize the story.
- Use the action checklist or callout at the end to pick the next right move.
Financial Modeling Unit
Quantitative Analysis Lead · Expert in amortization modeling, interest rate logic, and personal finance scenario planning. Verifies the mathematical integrity of every financial calculator.
Gross yield is a starting line, not the finish
Annual rent divided by purchase price is easy to quote and easy to abuse. It ignores vacancy, tenant turnover painting, society special levies, property tax, insurance, and your time. Investors who live by gross yield alone are surprised when the first empty quarter arrives.
The rental ROI tool pushes you to include more of those frictions. It still cannot model legal risk, liquidity, or neighborhood trajectory—use it as a disciplined screen.
Leverage changes everything
A high gross yield can turn mediocre on cash-on-cash once EMI, registration, and opportunity cost of down payment enter. Conversely, moderate gross yield with sensible leverage and stable tenants can work. Model financing explicitly instead of assuming rent covers EMI because it rhymes.
Vacancy stress tests
Assume at least two weeks to one month a year unless you have evidence otherwise. Tier-2 markets and new supply can gap harder. Run scenarios at zero, eight, and fifteen percent vacancy to see how fragile the deal is.
Principal is not income
EMI contains principal repayment, which builds equity but is not spendable return. Separate cash flow from balance sheet when you brag or worry about a property.
Bottom line
Good screening is boring: include conservative costs, stress vacancy, and compare financed versus unlevered outcomes. If the deal only works on rosy assumptions, pass or renegotiate.
Apply this article
Open the calculators below to turn these ideas into your own numbers and next steps.
Tools in this guide
Open a calculator directly—each runs in your browser without sign-up.
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