Deal analysis is a discipline, not a vibe. This walkthrough gives you a repeatable seven-step sequence you can run on any income property in under an hour, with every number sourced or explicitly assumed.

Step 1: Document the price and the real cash in

Record the asking price, then build your actual cash requirement: down payment, closing costs, immediate repairs, furnishings, initial reserves. This total, not the down payment alone, is your denominator for cash-on-cash return.

Step 2: Establish market rent with evidence

Find three to five comparable listings for the same area and condition band. Note what they ask and how long they have been listed. Your rent assumption should be defensible to a skeptical partner.

Step 3: Choose a vacancy assumption you can defend

Use the property's actual history if available; otherwise pick a conservative percentage. Run the analysis at two levels, expected and pessimistic.

Step 4: Build the operating expense line

  1. Property tax: from the current bill or assessment record.
  2. Insurance: get a quote; don't guess.
  3. Management: budget a percentage even if self-managing.
  4. Maintenance reserve: a monthly line for repairs and capital items.
  5. Other recurring: utilities you pay, service charges, compliance costs.

Step 5: Compute NOI

Effective income minus operating expenses. This is the property's standalone earning power. Check it against the price with the cap rate calculator.

Step 6: Add financing, get cash flow

Compute the loan payment and subtract annual debt service from NOI. Then compute cash-on-cash return on your true cash-in from Step 1 with the rental ROI calculator.

Step 7: Stress test and decide

Re-run everything with higher vacancy, higher maintenance, or a lower rent. Check the lender's view with the DSCR calculator. If the deal survives the pessimistic run with acceptable risk, proceed; if not, you just saved yourself a costly lesson.