Question 1

What's the difference between cap rate and cash-on-cash?

Accepted Answer

Cap rate ignores financing and uses NOI ÷ price; cash-on-cash includes financing and your cash invested. Cap rate shows property performance independent of how you finance it, while cash-on-cash shows your actual return on invested capital.

Question 2

Is DSCR based on NOI or cash flow?

Accepted Answer

DSCR uses NOI divided by annual debt service. It measures the property's ability to cover debt payments from operating income, which is why lenders focus on it for underwriting.

Question 3

How do I enter expenses if I only know a percentage?

Accepted Answer

Choose '% of rent' or '% of price' from the expense basis dropdown, and the calculator will convert them to dollars automatically. This is useful for quick analysis when you don't have exact expense figures.

Question 4

Does this include vacancy?

Accepted Answer

Yes—vacancy reduces gross rent to compute effective gross income (EGI) and NOI. The default is 7%, but you can adjust it based on your market and property type.

Question 5

Can I analyze a house hack or duplex?

Accepted Answer

Yes—enter total rent (or per-unit sum) and expenses; adjust vacancy as needed. For house hacking, you might reduce vacancy since you'll occupy one unit.

Question 6

What is the 70% rule for flips?

Accepted Answer

The 70% rule suggests your maximum offer should be 70% of ARV minus rehab costs and other expenses. It's a quick screening tool to ensure adequate profit margin, though actual margins vary by market.

Question 7

How does the sensitivity analysis work?

Accepted Answer

The sensitivity tab lets you adjust rent, interest rate, vacancy, and expenses to see how changes affect cash flow, cash-on-cash return, and DSCR. This helps you stress-test deals and understand downside risk.

Question 8

Can I use this for commercial properties?

Accepted Answer

Yes, the calculator works for any income-producing property. Just enter the appropriate income, expenses, and financing terms. Commercial properties typically use cap rate and DSCR as primary metrics.

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