Calculators · Investing

Deal analyzer

A first-pass screen for any rental: cash flow, coverage, cap rate against the mortgage rate, expense ratio and total return.

Screening verdict

Proceed with caution

2 of 5 checks pass. A screen, not an appraisal: it tells you whether the deal deserves a full analysis with real rent comparables, a strata review and a lender’s numbers.

Fail: Cash flow positive after all expenses−$923 a month
Fail: Debt service coverage of 1.10 or better0.69×
Fail: Cap rate at or above the mortgage rate3.82% vs 4.89%
Pass: Expenses under 45% of effective rent33%
Pass: Total first-year return above 6%13.4%

Monthly cash flow: −$923
Cap rate: 3.82%
Debt coverage: 0.69×
Cash-on-cash: -7.6%
Break-even rent: $4,151
Total return, year 1: 13.4%

Proceed with caution

The deal works on paper only if the assumptions hold. Test rent 10% lower and the rate 1% higher; if it still clears, negotiate on price.

Assumptions behind these figures

Net operating income = rent less vacancy, property tax, insurance, strata, maintenance and management. Debt service is the first year’s mortgage payments.
Cap rate = NOI ÷ price. Cash-on-cash = annual cash flow ÷ (down payment + closing costs). DSCR = NOI ÷ debt service.
Total first-year return adds principal paid down and appreciation to cash flow. Income tax, capital gains tax and the speculation and vacancy tax are left out.
Checks: cash flow ≥ 0; DSCR ≥ 1.10; cap rate ≥ mortgage rate; expense ratio < 45%; total first-year return > 6%. Four passes = worth a closer look; two or three = caution; fewer = walk.

These calculators are educational illustrations, not advice and not an offer of credit. Figures are estimates from the inputs you enter and simplified rules; your lender's calculation, rates, fees, taxes and qualification will differ and are confirmed only by a licensed mortgage professional, lawyer or accountant. Mervin Truong is a licensed real estate professional, not a mortgage broker or financial advisor.

More for investing

Rental cash flowNOI, cap rate, cash-on-cash and debt coverage.

Borrow to investThe after-tax cost of idle equity and what it could become.

From estimate to plan

Talk to Merv about the real numbers.

A calculator describes a scenario. I'll read it against what's selling now and introduce a licensed mortgage professional to confirm what you qualify for.

Deal analyzerDeal analyzer

Talk to Merv about the real numbers.

Deal analyzerDeal analyzer

Talk to Merv about the real numbers.

Deal analyzer

Deal analyzer