Buy-to-Rent Decision Model
Does It Pencil?
Underwrite a house as a rental: the fully-loaded monthly carry, cap rate, cash-on-cash, the purchase price that breaks even on cash flow, and a year-by-year wealth projection. Pre-loaded with a real Seattle (98118) example — change any input.
The Deal
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Income & Growth
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yrs
Monthly cash flow
-$997
year 1, after all costs
Cap rate
3.98%
NOI ÷ price (unlevered)
Cash-on-cash
-6.1%
yr-1 cash flow ÷ cash in
Cash-neutral price
$521K
-26% vs price
Fully-loaded monthly carry · yr 1
Mortgage (P&I)$3,318
Property tax$577
Insurance$167
Maintenance + CapEx$250
Vacancy reserve$195
Property management$390
Total carry$4,897
Rent$3,900
Net cash flow-$997
Crediting ~$489/mo of principal paydown, economic carry ≈ -$508/mo.
Reality checks · yr 1
NOI (annual)$27,851
Cash invested$195,972
DSCR0.70
1% rule (rent ÷ price)0.56%
Gross rent multiplier15.0
Break-even rent$5,073/mo
Cash-flow positive in> 10 yrs
Investment breaks even inyear 5
Wealth projection · cash flow vs equity vs total profit
The read
At $699,900 with 25% down, it bleeds $997/mo in year 1 — a 4.0% cap and -6.1% cash-on-cash. To be cash-neutral you'd need to buy at $521K (-26%), or wait until beyond the horizon for rent growth to catch up. Counting equity, the whole investment turns net-positive in year 5, reaching $155K total profit by year 10.
Caveats: pre-tax model. Excludes the depreciation tax shield (and its phase-out above ~$150K MAGI), income tax on rent, and capital-gains tax on exit. Property tax grows with appreciation; other costs grow with expense inflation. “Total profit” is what you’d net if you sold that year: sale proceeds minus selling costs and loan balance, minus all cash in (down + closing) — so it leans heavily on the appreciation assumption. Directional tool — confirm with a CPA before buying.