What is DSCR and what do lenders require for a rental?

DSCR — Debt Service Coverage Ratio — equals net operating income divided by debt service (monthly PITI). Most DSCR-loan programs require 1.20x to 1.25x minimum; 1.00x means the property exactly pays its own mortgage; below 1.00x the owner is covering a monthly loss. The analyzer color-codes DSCR to surface this threshold.

What is a typical operating expense ratio for rentals?

Most investors use 40-50% of gross rent as the operating-expense budget — the "50% rule" minus vacancy. That bucket covers property management, maintenance, capex reserve, HOA (if any), and utilities the owner covers. Property taxes and insurance are handled separately in PITI. Dense-urban markets and older housing stock trend higher; newer class-A suburban rentals trend lower.

What is the post-sale property tax reset?

In seven states — California, Florida, Michigan, Nevada, Oregon, South Carolina, and Texas — the property-tax bill meaningfully changes when a property is sold. Most online calculators pull the seller's current bill and display it as if it's your bill too. That's wrong wherever there's a reassessment rule or exemption flip. This analyzer defaults to the post-sale projected bill on those state pages and shows the delta so you see the real cash-flow picture at close.

How is year-one cash-on-cash return calculated here?

Cash-on-cash = annual cash flow / total cash invested. Total cash invested = down payment + estimated closing costs (default 2% of purchase price, adjustable). Year-one CoC is sensitive to down payment — all-cash deals have low CoC by construction; high-LTV deals amplify it. The "null" result displays when total cash invested is zero (100% LTV with 0% closing costs).

What is a cap rate and how should I use it?

Cap rate = annual NOI / purchase price. It's a capital-structure-independent yield: two investors could buy the same property at the same cap rate and have different cash flow depending on their financing. Use cap rate for deal-to-deal comparisons within a market; use DSCR + cash flow for financing viability.

Does this calculator include HOA, utilities, and property management?

They're baked into the Operating Expenses slider (40% default). If you're self-managing and the tenant pays all utilities, adjust down to ~25-30%. Full-service property management (8-10% of gross rent) plus HOA, utilities, and turnover costs often pushes opex to 50%+. The slider lets you tune to your actual operating assumptions.

Rental Cash-Flow Analyzer

Model real post-purchase cash flow — including sale-triggered property tax resets — for any U.S. rental. Select your state below or use the calculator with Texas defaults.

Preliminary screening tool only.Default values are illustrative examples — not market offers. All calculations use state-level averages for taxes, insurance, and closing costs that vary significantly by county, property, and lender. State-specific post-sale tax-reset values model typical cases — actual reassessment outcomes depend on the assessor's methodology and any exemptions you qualify for. Use this tool to identify deals worth deeper analysis, then verify every number with local professionals (title company, insurance agent, lender, CPA) before committing capital. Any or all projections shown here can differ materially from actual results. This is not investment advice.

Example: $300K Texas Rental at 25% Down, 7.5% Rate

On a $300,000 purchase in Texas with 25% down, a 7.5% 30-year DSCR loan, and $2,400/mo rent (5% vacancy, 40% opex): Monthly PITI lands near $2,200, Monthly Cash Flow around $150–$250, DSCR near 1.10–1.20x, cap rate near 5.5–6.5%, and year-one cash-on-cash near 2–4%. Texas's post-sale tax-reset (§ 23.231 circuit-breaker) is applied automatically on the Texas state page — drop in your own numbers above to run the scenario live.

Analyze Rentals in Your State

Each state page loads local property tax rates, insurance estimates, foreclosure timelines, rent-control posture, and — where applicable — the exact post-sale tax-reset mechanic for that state. Reset-state pages default the analyzer to the post-sale projected bill so you see the cash-flow impact before you write the offer.

Alabama0.37% tax Alaska0.9% tax Arizona0.43% tax Arkansas0.54% tax California0.69% tax · Post-sale reset Colorado0.52% tax Connecticut1.36% tax Delaware0.51% tax Florida0.76% tax · Post-sale reset Georgia0.77% tax Hawaii0.31% tax Idaho0.43% tax Illinois1.79% tax Indiana0.76% tax Iowa1.25% tax Kansas1.2% tax Kentucky0.72% tax Louisiana0.56% tax Maine0.9% tax Maryland0.9% tax Massachusetts0.95% tax Michigan1.13% tax · Post-sale reset Minnesota0.99% tax Mississippi0.54% tax Missouri0.85% tax Montana0.59% tax Nebraska1.38% tax Nevada0.5% tax · Post-sale reset New Hampshire1.35% tax New Jersey1.68% tax New Mexico0.61% tax New York1.23% tax North Carolina0.62% tax North Dakota0.94% tax Ohio1.28% tax Oklahoma0.78% tax Oregon0.79% tax · Post-sale reset Pennsylvania1.14% tax Rhode Island1% tax South Carolina0.44% tax · Post-sale reset South Dakota1% tax Tennessee0.46% tax Texas1.25% tax · Post-sale reset Utah0.45% tax Vermont1.4% tax Virginia0.75% tax Washington0.74% tax West Virginia0.48% tax Wisconsin1.19% tax Wyoming0.58% tax

What to Watch: Key Risk Themes for Rental Investors

Post-Sale Property Tax Reset Risk

The single most commonly overlooked line item for new rental buyers. California (Prop 13/19 acquisition-price reset), Florida (§ 193.1554 non-homestead 10% cap reset), Michigan (Proposal A taxable-value uncap to SEV), Nevada (NRS 361.4723 cap shifts from 3% to 8% for non-owner-occupied), Oregon (Measure 50 MAV dynamics), South Carolina (Act 388 assessment ratio flip 4% → 6% on investor sale), and Texas (§ 23.231 20% circuit-breaker sunset 2026) all restructure the tax bill on sale. Most online calculators echo the seller's current bill. This tool defaults state-page defaults to the post-sale projected bill, with the delta visible at both the tax input and inline with Monthly Cash Flow so you never under-budget the first year.

Rent Control Expansion

Oregon has statewide rent control. California's AB 1482 caps most units at 5% + CPI. New York's HSTPA (2019) and Good Cause Eviction (2024) transformed the regulatory landscape. Minneapolis and St. Paul enacted 3% caps. Virginia (Alexandria) recently enacted rent stabilization. Massachusetts and Colorado have active repeal efforts targeting their statewide preemptions. Factor achievable rent growth into your underwriting, especially on buy-and-hold deals where year-5+ rent assumptions drive returns.

Section 8 & Source-of-Income Discrimination Laws

More than 20 states and dozens of cities now have source-of-income (SOI) protection laws that prohibit landlords from refusing Section 8 voucher holders. New York State, New Jersey, California, Oregon, Washington, Massachusetts, Minnesota, and Illinois among them. This changes your tenant pool and your eviction exposure: HUD rules layer on top of state landlord- tenant law and can extend the timeline to repossess a non-performing unit. Verify local posture before underwriting voucher-heavy markets.

Short-Term Rental Conversion Risk

STR rules are changing faster than any other regulatory category. Cities like Nashville, New York City, and Honolulu have effectively banned investor-owned STRs in residential zones. Austin, Denver, Portland, and Asheville are actively tightening restrictions. If your cash-flow case depends on Airbnb/ Vrbo conversion, re-run the analyzer on long-term-rental assumptions to see whether the deal still pencils if the local ordinance flips.

How It Works

This analyzer models year-one cash flow for a single long-term rental. You enter the purchase price, down payment, financing terms (rate, LTV, amortization), projected rent, vacancy, and operating-expense percentage — and the calculator returns Monthly Cash Flow, DSCR (Debt Service Coverage Ratio), Cap Rate, and Year-One Cash-on-Cash live as you adjust the inputs.

When you land on a state-specific page, the analyzer seeds defaults from that state's median home value and median rent — so /california starts with a credible California-shaped deal, not a generic $200K house. Property taxes are calculated from the state's effective rate, insurance from a non-linear piecewise interpolation scaled by the state's risk multiplier (matches the same engine used by the Flip vs. BRRRR analyzer).

On the 7 post-sale tax-reset states (CA, FL, MI, NV, OR, SC, TX), the “Model Post-Purchase Reset” toggle sits at the top of the taxes section — ON by default — and the property-tax input renders the post-sale projected bill, not the seller's current bill. Flip it off to compare against the seller's bill; the delta stays visible in both places. On the 43 other states, the toggle is replaced by a plain informational note explaining that taxes typically remain stable on transfer.

Every input round-trips through the URL — share a link and the recipient opens to exactly your scenario.

Rental Cash-Flow Formulas

Rental Math

Loan Amount = Purchase Price × (1 − Down Payment%)
Total Cash Invested = Down Payment + Closing Costs
Monthly PITI = P&I + (Annual Tax / 12) + (Annual Insurance / 12)
Effective Rent = Rent × (1 − Vacancy%)
NOI (monthly) = Effective Rent − (Effective Rent × OpEx%) − (Annual Tax + Annual Insurance) / 12
Monthly Cash Flow = NOI − Monthly P&I
DSCR = NOI ÷ Monthly PITI
Cap Rate = (NOI × 12) ÷ Purchase Price
Year-1 CoC = (Monthly Cash Flow × 12) ÷ Total Cash Invested

Frequently Asked Questions

Rental Cash-Flow Answers at a Glance

What DSCR do lenders require for a rental loan?

Most DSCR-loan programs require a minimum of 1.20x to 1.25x — meaning net operating income must exceed monthly PITI by 20–25%. A DSCR of 1.00x breaks even; below 1.00x the owner covers a monthly loss out of pocket.

What operating expense percentage should I use for a rental?

A planning range of 40–50% of gross rent is the industry standard (the “50% rule” minus vacancy). Tune down to 25–30% for self-managed, tenant-pays-utilities cases; tune up past 50% for full-service management in dense-urban or older-housing markets.

How does a post-sale property tax reset affect rental cash flow?

In the seven reset states (CA, FL, MI, NV, OR, SC, TX), the post-sale tax bill can run $100–$400+ per month higher than the seller's bill — enough to turn cash-positive deals cash-negative at close. This analyzer defaults state-page tax inputs to the post-sale projected bill and surfaces the monthly delta inline with Monthly Cash Flow so the surprise lands before you sign, not after.

Common Use Cases

Screen rental deals against a DSCR floor — paste the numbers, see whether a DSCR-loan lender will fund it
Compare the same property across states — see how California's post-sale reset changes a $300/mo Texas deal into a $100/mo California deal on the same purchase price
Stress-test rent and vacancy — bump vacancy from 5% to 10%, drop rent 10%, see if the deal still pencils
Share a link with partners or lenders — every input syncs to the URL so the recipient opens to your exact scenario

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