How to Analyze a Rental Property, a Step-by-Step Walkthrough

Published June 19, 2026 · DSCRRadar

A good deal analysis follows the same five steps every time. Run them on the investment property calculator and you’ll catch bad deals before they catch you.

1. Start with gross yield

Gross yield = annual rent ÷ price. It’s the fastest screen. Under about 6% in 2026 almost never cash-flows, and 8% or higher is where cash-flow markets live. The Index bands gross yield across 5.5% to 10%, which brackets that range. Gross yield is the cousin of the 1% rule.

2. Compute cap rate (unlevered)

Cap rate = NOI ÷ price, where NOI is rent minus operating expenses (typically a 40% load). Cap rate tells you the property’s yield ignoring financing.

3. Layer in financing with DSCR

With your down payment and rate, compute DSCR = NOI ÷ annual debt service. If it’s under 1.2, the property likely won’t qualify for a DSCR loan and probably cash-flows negative.

4. Compute cash-on-cash (levered)

Cash-on-cash = annual cash flow ÷ cash invested. It captures the return on the money you actually put in, the number that decides whether the deal pays you each month.

5. Make the go/no-go call

Weigh cash-on-cash against your alternatives and the market’s appreciation prospects. A cash-flow-negative deal can still work if appreciation and loan paydown outweigh it, but that’s a bet on growth, not a cash-flow investment. The Investor Yield Index ranks the 18 metros on this exact math so you can see which ones come closest before you run a single deal.

The takeaway

The investors who lose money skip steps 3 and 4, they buy on cap rate alone and get surprised by negative cash flow. Run all five.

DSCR calculator → Cap rate calculator → Investor Yield Index →