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Rental-property decisions get clearer when you understand what each metric is actually measuring. Use several together instead of letting one number make the decision.
In this guide
For a closer look at the next step, read Cap Rate vs. Cash-on-Cash Return: What Rental Investors Should Track.
1. Net operating income (NOI)
NOI is rental income minus operating expenses before debt service. It is a core input for cap rate and DSCR.
Before calculating NOI, pressure-test the income side with local rental evidence. Research rent estimates and comparable rentals with RentCast → Affiliate link; verify estimates locally.
2. Monthly cash flow
Cash flow is what remains after operating costs and financing. It shows the property’s month-to-month breathing room.
3. Cap rate
Cap rate compares annual NOI with property value or purchase price and is useful for comparing operating performance independent of financing.
4. Cash-on-cash return
Cash-on-cash return compares annual pre-tax cash flow with the cash you invested.
5. DSCR
Debt service coverage ratio compares NOI with required debt service and helps show how comfortably the property supports its debt.
6. Loan-to-value (LTV)
LTV compares the loan balance with the property value and helps describe leverage.
7. Break-even occupancy
Break-even occupancy estimates the occupancy level required for income to cover operating costs and debt service. It is useful for understanding vacancy sensitivity.
Use the matching Rental Owner Studio tool.
The Rental Property Deal Analyzer puts these metrics in one workbook so you can see how a change in rent, expenses or financing affects the entire deal.
View the matching tool on Etsy →Want to check loan coverage with your own figures? Use the free rental property DSCR calculator →