Rentals
Cash flow, returns and the costs that decide whether a rental pays.
3 articles
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.
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.
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.