Cash flow is the number that pays your bills, not equity or appreciation — those are on paper until you sell or refinance. Watch for owners who quote "cash flow" using only the mortgage payment and forget vacancy, maintenance, and management — that inflated number is the #1 way new investors get burned.

Quick math: $2,200 rent − $250 vacancy/maint/mgmt reserve − $767 mortgage − $175 taxes/insurance = ~$1,008/mo before you've touched a wrench. Run every deal through DealGrade's full breakdown rather than eyeballing it.

This is the metric that lets you compare a rental against the stock market, a CD, or another deal — it's a return on your money, not the property's total value. A property that costs more but needs less cash down (bank financing) can have a much higher cash-on-cash return than the same property bought outright.

Formula: (annual cash flow ÷ total cash invested) × 100. Total cash invested includes your down payment, closing costs, and any rehab you paid out of pocket — not the full purchase price.

The 1% rule exists to save you time — it lets you screen out obviously bad deals in seconds before running full numbers. It's not a promise of profitability: a property can pass the 1% rule and still lose money once taxes, insurance, or HOA fees are high, and can fail the 1% rule while still cash-flowing nicely in a low-expense market.

Coastal and high-appreciation metros routinely run 0.5–0.7% and still attract serious investors chasing appreciation over cash flow — use the rule as a filter, not a verdict.

DSCR loans are popular with investors because they qualify off the property's income, not your personal W-2 or tax returns — handy for self-employed buyers or anyone who already owns several rentals and is "maxed out" on conventional debt-to-income limits.

Formula: Net Operating Income (rent minus operating expenses, before the mortgage) ÷ annual mortgage payment. A DSCR of 1.0 means the property exactly breaks even on the debt; below 1.0 means it doesn't cover its own loan payment from operations alone.

The 50% rule bakes in long-run averages for things new investors chronically underestimate: vacancy between tenants, routine maintenance, bigger periodic costs like a roof or HVAC (CapEx), property management, taxes, and insurance. It's a long-term average, not a monthly guarantee — some months will be near 20%, others near 80% when something breaks.

Older properties, larger multi-family, and markets with higher property taxes tend to run above 50%; newer construction with low taxes can run meaningfully below it.

Hard money is priced for speed and risk, not affordability — it's a bridge, not a destination. Lenders care most about the after-repair value (ARV) and your exit plan, since the loan is secured by the property itself and they need to know they can get their money back if you don't.

The BRRRR math that matters: if your refinance loan (usually ~75% of ARV) doesn't return enough cash to pay off the hard money balance plus points and holding costs, you're stuck holding an expensive loan — always model the refinance before you close on the hard money, not after.

Underestimating repairs is the single biggest budget-killer — add a contingency of 10–20% on top of any contractor estimate, since surprises (rot, old wiring, permit issues) are the rule, not the exception, on older homes.

Using the listing's suggested rent instead of real comparable listings is how deals that "pencil" on paper lose money in reality — sellers and agents have every incentive to quote optimistic numbers. Always verify with 2–3 independent sources.

Skipping the inspection to make an offer more competitive can save you a week, and cost you tens of thousands if it hides a bad foundation or roof — it's rarely worth the risk except on properties you're buying purely for land value or a full teardown.

Every one of these checks is cheap and fast compared to the cost of being wrong after you're under contract with earnest money on the line. Insurance in particular can swing wildly by property age, roof condition, and location (flood/wind zones) — a guessed number can be off by hundreds per month.

Ask the seller directly for their most recent tax bill rather than trusting a county estimate — many areas reassess property tax at the new sale price, which can be significantly higher than what the current owner is paying.