Skip to content
guide active rental-property-analysis
Topic Guide

Rental Property Analysis

Direct AnswerCap rates, cash-on-cash returns, and how to evaluate whether a rental deal pencils out.

In this topic Investment Financing

Library

Articles in this

LendCity™

what to read

Why this guide · 00

Great investors make decisions based on numbers, not emotions.

123 guides End of tape
Investor learning paths

Tools & proof for this topic

Same four paths sitewide — start where your file is today.

Ready to Move From Learning to Action?
FAQQ & A

Questions About Rental Property Analysis

Practical answers on rental property analysis for Canadian real estate investors — financing, strategy, and next steps.

Core Return Metrics

Cap rate is net operating income divided by purchase price (or value), before financing. It helps you compare assets in the same market, but it ignores your loan terms and tax position. A high cap rate can simply price in weaker location, older building systems, or higher vacancy risk.
Cash-on-cash divides annual pre-tax cash flow after debt service by the cash you left in the deal. Two properties with the same cap rate can produce very different cash-on-cash results if leverage, rate, or amortization change. Use both: cap rate for the asset, cash-on-cash for your equity.

Underwriting the Numbers

Vacancy, turnover, capital reserves, and insurance are the usual misses — especially on older buildings and short-term rentals. Property tax assessments can also jump after a sale. Stress the file with a vacancy allowance and a reserve per door before you call it a win.
Start with in-place leases and trailing collections, then show a separate upside case if you plan to raise rents to market. Lenders will often credit in-place income more heavily than a pro forma. If the building is vacant, use comparable leases — not the seller’s wish list — and document the source.

Deal Screening

Normalize unit mix, utilities, parking income, and deferred maintenance so you are not comparing a renovated building to one that needs a roof. Then run the same vacancy and expense assumptions on both. Price per door is a shortcut; debt coverage and cash-on-cash tell you which file you can actually hold.
Walk when the only way the deal works is a rent you cannot defend, a renovation budget without bids, or financing that no lender has confirmed. Cheap purchase prices often hide structural, environmental, or tenancy problems. A LendCity™ strategy call can test whether any lender will finance the file as you modelled it.

Core Return Metrics (Continued)

NOI is effective rental income minus operating expenses such as taxes, insurance, utilities you pay, management, and repairs. Do not deduct mortgage principal and interest, depreciation, or capital improvements when you calculate NOI. Lenders and appraisers will normalize vacancy and some expenses, so your brochure NOI may not be the underwritten NOI.
Ready to Move From Learning to Action?

Ready to Move From Learning to Action?

Book a free strategy call and let's build a financing plan for your next deal.

We use privacy-friendly analytics (no ad tracking). Calculator settings are saved on your device. See our Privacy Policy .