GetToolr

How to Use This Calculator

Enter the purchase price, expected monthly rent, and basic expenses. The analyzer instantly grades the deal from A to F by checking it against five industry-standard rules of thumb. It also tells you what price would make the deal work if the current numbers fail.

Quick Analysis

Deal Analyzer

Get a quick deal-or-no-deal verdict. 5 inputs, instant answer.

Property Details

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Rules of Thumb

1% Rule

Rent is < 1% of all-in cost

0.90%

FAIL

Cap Rate

Above 5% minimum

8.46%

PASS

Cash-on-Cash

Above 8% target

10.37%

PASS

DSCR

Above 1.2x threshold

1.32x

PASS

50% Rule

Est. expenses ~50% of rent = $855

$855

PASS

What Price Would Work?

For 1% Rule

$180,000

For 5% Cap Rate

$338,400

Deal Grade

B

Good deal. Passes most criteria.

4/5 rules passed

Cash Flow

$346/mo

$4,146/year

Effective Rent$1,710
Mortgage (P&I)-$1,064
Tax + Insurance-$300

Key Metrics

Gross Yield10.80%
All-In Cost$200,000
Cash Required$40,000

Real Estate Rules of Thumb

1% Rule

Rent >= 1% of Price

Quick screening for rental properties. $200K property should rent for $2K+/month. Properties that fail this test rarely cash flow with financing.

50% Rule

Expenses = 50% of Rent

Estimate that half your gross rent goes to operating expenses (not including mortgage). Useful for quick napkin math before running a full analysis.

Cap Rate

Target 5-10%

Net Operating Income divided by property value. Ignores financing. Good for comparing properties on an equal basis regardless of how you fund the deal.

DSCR

Target 1.2x+

Gross rent divided by total debt payments (PITIA). Measures whether income covers the mortgage. Lenders use this to qualify DSCR loans.

How the Deal Grade Works

The analyzer checks your deal against all five rules simultaneously and assigns a letter grade based on how many rules it passes. This is not a guarantee of success. It is a quick filter to identify which deals are worth deeper analysis and which you should pass on.

  • Grade A (5/5 rules pass): Strong deal by all measures. Worth moving forward with detailed due diligence.
  • Grade B (4/5): Good deal with one metric slightly below threshold. Investigate the failing metric to see if it is a deal-breaker.
  • Grade C (3/5): Marginal. The deal might work but has meaningful weaknesses. Proceed only if you understand and accept the risks.
  • Grade D-F (2 or fewer): The numbers do not work at this price. Use the "What Price Would Work" section to see if a lower offer could fix it.

Speed matters

Good deals get taken fast. The deal analyzer is designed for speed. Run the numbers in under 30 seconds, get a verdict, and decide whether to dig deeper or move on. Do not spend hours analyzing a deal that fails basic screening.

What Price Would Work?

When a deal fails at the listed price, the analyzer shows you two target prices: one based on the 1% rule and one based on a 5% cap rate. These tell you the maximum you should offer to make the numbers work. Use these as starting points for negotiation, not final offers.

Frequently Asked Questions

What is the 1% rule in real estate investing?
The 1% rule states that a rental property's monthly rent should be at least 1% of the total purchase price. A $200,000 property should rent for at least $2,000/month. It is a quick screening tool, not a guarantee of profitability. Properties that pass the 1% rule still need full analysis including expenses, vacancy, and financing costs.
What is a good cap rate for a rental property?
Cap rates vary by market and property type. In general, 5-7% is considered solid for residential rentals in stable markets. Class A properties in major metros often have 3-4% cap rates, while Class C properties in secondary markets can reach 8-10%. Higher cap rates usually come with higher risk.
What cash-on-cash return should I target?
Most investors target a minimum of 8% cash-on-cash return. This means for every $50,000 of cash invested, you earn at least $4,000/year in cash flow. Below 8%, the risk-adjusted return may not justify the effort compared to passive investments like index funds.
What does DSCR mean and why does it matter?
DSCR stands for Debt Service Coverage Ratio. It measures whether a property's income covers its debt payments. A DSCR of 1.0x means income exactly equals payments (break-even). Lenders typically require 1.2x or higher. DSCR above 1.25x gets you the best loan terms.

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