Analyze an Investment Property Like a Spreadsheet
Model purchase costs, financing, vacancy, operating expenses, capital reserves, annual cash flow, cap rate, cash-on-cash return, DSCR, equity growth, sale proceeds and a multi-year IRR estimate.
Purchase and loan
Income and operating expenses
Growth and sale assumptions
Investment property result
| Year | Effective income | Operating expenses | NOI | Debt service | Cash flow | Loan balance | Property value | Equity |
|---|
Rental property investment formulas
Net operating income equals effective rental income minus operating expenses before debt service. Cap rate divides first-year NOI by purchase price. Cash-on-cash return divides first-year pre-tax cash flow by the initial cash invested. DSCR divides NOI by annual debt service.
What the spreadsheet-style projection adds
The annual table grows rent and expenses independently, amortizes the mortgage, estimates property value, and adds net sale proceeds in the final year. IRR is calculated from the initial cash outflow and annual cash flows, while NPV uses the entered discount rate.
Initial cash invested
Initial cash includes the down payment, closing costs and initial repairs. Loan principal is purchase price minus down payment. This distinction prevents financed money from being counted as investor cash.
Does cap rate include the mortgage?
No. Cap rate is an unlevered property metric based on NOI and property value. Cash-on-cash return includes financing through debt service and cash invested.
What is break-even occupancy?
It is the occupancy percentage needed for effective income to cover operating expenses and debt service under the entered assumptions.
Is the IRR a guaranteed return?
No. It is a mathematical return from the entered projection. Actual rent, expenses, financing, taxes and sale price may differ substantially.