First Rental Property Checklist: 10 Numbers to Know Before You Buy

Work through these in order. Each one builds on the previous.

1. Market rent — verified, not assumed.

   Check 3–5 comparable active rental listings in the same neighborhood on Zillow, or Rentometer. Look for the same bedroom count, square footage, and condition within half a mile. If comps are at $1,700/month and the seller claims $2,000, use $1,700 in your model.

2. Vacancy allowance (5–10%).

   Even with a tenant in place, apply a vacancy factor. Tenants turn over. There are days between leases. Even strong rental markets have vacancy. Using 0% is the most common mistake first-time investors make. Use 5% for tight markets, 8–10% for softer ones.

3. Property taxes — exact figure from the county.

   Don't rely on the listing agent or seller's stated taxes. Look up the exact figure on the county assessor's website. Also check whether your purchase price will trigger a reassessment — in many states (especially California and Florida), a sale at a higher price resets the tax basis and significantly increases future bills.

4. Landlord insurance premium.

   Get an actual landlord insurance quote before closing. It will be meaningfully higher than the current owner's homeowner policy (homeowner policies don't cover rental activity). For a typical single-family rental, budget $1,200–$2,500/year depending on age, location, and coverage.

5. Maintenance & repairs budget.

   Budget 1–1.5% of property value per year for routine maintenance and repairs. For a $300,000 property, that's $3,000–$4,500/year. This covers leaky faucets, appliance repairs, painting between tenants, pest control, and the dozens of small things that come up in any occupied home.

6. CapEx reserve — check every major system.

   Budget another 1–1.5% of property value per year for capital expenditures: roof replacement (~$10,000–$20,000), HVAC (~$5,000–$10,000), water heater (~$1,500), appliances, and windows. Before you close, find out the age of each major system. A 20-year-old roof means you should budget for replacement in the next 5 years.

7. Property management fee.

   Even if you plan to self-manage, include 8–10% of gross rent in your model. First, because self-management has a real opportunity cost (your time). Second, because if you ever decide to hire a manager or want to sell to an investor, the deal needs to pencil with a management fee. A deal that only works because you self-manage is not a real estate investment — it's a second job.

8. Monthly mortgage payment at your actual rate.

   Get a pre-approval letter with a real rate lock. Use that exact rate, not a headline rate you saw online. Also model the payment at your rate + 1.5% to stress test what happens if rates rise and you need to refinance. The difference on a $240,000 loan between 6.5% and 8% is about $210/month.

9. Monthly cash flow.

   This is the number that tells you whether the property pays you or you pay it. Cash Flow = Gross Rent − Vacancy − All Operating Expenses − Mortgage Payment. Positive means the property generates income. Negative means you're subsidizing it. Even a modest negative ($100–$200/month) adds up to $1,200–$2,400/year in out-of-pocket costs — understand that going in.

10. Cash-on-cash return.

    Annual Cash Flow ÷ Total Cash Invested (down payment + closing costs + any repairs before renting). This is your annual yield on the money you actually put in. A 6%+ CoC return is a reasonable target for a first deal. Below 4%, you need a strong appreciation thesis to justify the investment versus other options. Below 0%, you need exceptional confidence in appreciation to proceed.

Here's how these numbers look for a hypothetical $300,000 single-family rental:

At 6.75% interest rates, this deal is cash-flow negative even with solid rent. The cap rate is $8,568 ÷ $300,000 = 2.86% — well below the cost of debt. To make it work, you'd need either a lower purchase price, higher rent, or a larger down payment to reduce debt service. The Deal Negotiator can solve for the exact price or rent that achieves your target return.

In order of how often they bite new investors:

1. CapEx reserve. Beginners focus on month-to-month cash flow and forget that capital items fail on their own schedule. A $15,000 roof failure in Year 3 that you didn't budget for can wipe out years of positive cash flow. Set aside a monthly CapEx reserve from day one — even if you never spend it, you'll sleep better.
2. Vacancy allowance. “But I have a great tenant who has been there for four years” is not a vacancy model. That tenant will eventually leave, and the property will sit empty for some period. Budget for it.
3. Management fee. This is the most controversial one. Many first-time investors say, “I'll self-manage to save the 10%.” Fine — but model the fee anyway. If the deal only works because you personally manage it, you're not buying a passive investment, you're buying a job. Know the difference.

You don't need a spreadsheet to check all these numbers. Enter your deal into the Real-Estate Analyzer and every metric — cap rate, NOI, cash flow, CoC return, DSCR, and IRR — is calculated automatically as you type. You can then:

• Run a stress test to see how the deal holds up if vacancy doubles or rent drops 10%
• Use the Deal Negotiator to find the exact price or rent that hits your target return
• View a 30-year forecast of cash flow, equity, and IRR
• Save and compare multiple deals side by side

No account required. No spreadsheet cleanup. Free.