Skip to content
DealLevel

Straight answers before you buy

Plain-English guides to rentals, flips, BRRRR and short-term rentals, with every number shown.

  1. The 70% rule approved this flip. Three surprises cut its profit by 73%.

    The 70% rule stops you overpaying, but the 30% it leaves isn’t profit. In this worked example, $42,276 of it goes to buying, holding, loan and selling costs, and three surprises cut the $40,224 profit to $10,759.

    3 min read

  2. What occupancy does an Airbnb need to break even? This one needs 71%.

    Break-even occupancy is the share of nights that must be booked before the income covers every cost. At $300 a night, an example $350,000 Airbnb needs about 71%, roughly 258 nights a year, because Airbnb’s fee, a co-host, cleaning and the mortgage come out first.

    3 min read

  3. BRRRR example: $20,000 off the appraisal doubles the cash stuck in the house

    In a BRRRR, the appraisal decides how much of your cash comes back. In this example, a $200,000 appraisal leaves $13,600 of your cash in the house and a $180,000 one leaves $28,300, even though the lower appraisal shows better monthly cash flow.

    3 min read

  4. Cap rate vs. cash-on-cash: why the same house shows 7.1% and 0.2%

    Cap rate is what a house earns on its price, whoever owns it. Cash-on-cash return is what your own cash earns after your loan. On one example $250,000 rental, the cap rate stays at 7.1% while cash-on-cash runs from 0.2% to 6.9%, depending on the loan.

    3 min read

  5. The 1% rule said yes to a house that loses $306 a month

    The 1% rule works as a quick filter, not as a verdict. It only compares rent to price, so two houses can both pass it and end up $450 a month apart.

    3 min read

  6. The seller’s rents say this duplex makes $233 a month. Today’s rents say it loses $142.

    Analyze a duplex on the rent each unit can get today, not the seller’s hoped-for rents. In this example the seller’s rents show $233 a month of cash flow, today’s rents show a $142 loss, and with one unit empty the building collects half its rent.

    3 min read

  7. Rent out your house or sell it? Check the three-year tax clock first

    Compare the monthly cash flow from renting with the cash in hand from selling. Then check the tax clock: if you lived there two of the last five years, up to $250,000 of profit ($500,000 for most married couples) can be tax-free, and renting it out for more than three years can end that.

    3 min read

  8. This rental made $966 a month on paper. Seven fixes later, it lost $34.

    A rental can look great on paper when the first pass leaves out real costs. In this example, fixing seven mistakes one at a time turns $966 a month into a $34 loss.

    3 min read

  9. 12 numbers to confirm before you make an offer on a rental

    Get three numbers from a real source instead of the listing: the rent similar homes lease for, the tax bill after you buy, and an insurance quote. Estimate the other nine, from empty months to closing costs, then test the one that would flip the answer.

    3 min read