Down Payment
The amount you pay upfront.
Purchase price
− First loan − Second loan
Approximate cash invested
All the cash you put in at the start.
Down Payment + Closing costs + Fix-up costs + Loan points
Minimum recommended cash reserves
We recommend that you have reserves for vacancies, repairs and contingencies of at least 4% of Initial Market Value or $5,000, whichever is higher.
max(4% × Initial Market Value, $5,000)
Cost per square foot
Helps you compare prices across properties.
Purchase price / Square feet
Rent per square foot
Useful for comparing rental income.
Monthly rent / Square feet
Nominal / Real interest rate
Nominal is the stated interest rate on the loan.
Real approximates the interest rate after inflation.
Real rate
= Nominal rate − Projected inflation rate
Vacancy losses
Expected lost rent when the property is empty.
Rent × Vacancy rate (as a percent)
Operating income
Income after accounting for empty periods.
Rent
− Vacancy losses
Net operating income (NOI)
Income before mortgage payments.
Operating income
− All property expenses (taxes, insurance, management, maintenance, etc.)
Cash flow
What's left after paying the mortgage. Positive means the property pays for itself.
Net operating income
− Monthly loan payment
Capitalization rate
A quick way to compare similar properties.
Annual net operating income / Purchase price × 100 → %
Debt coverage ratio
How many times your income covers the mortgage. Above 1.0 means income exceeds the payment.
Net operating income / Monthly mortgage payment
Cash on cash return
Shows how hard your money is working.
Annual cash flow / Cash invested × 100 → %
Base Return on Investment (ROI)
Total return as a percent of what you invested. We also show versions that include Inflation Induced Debt Destruction® (IIDD) and tax benefits.
Gross equity income (cash flow + principal + appreciation) / Cash invested × 100 → %
Inflation-Enhanced ROI™ (with IIDD)
Trademark of Jason Hartman. Permission to use with attribution.
Return on investment including the benefit of inflation reducing the real value of your debt.
Return on investment
+ Inflation Induced Debt Destruction® (IIDD) / Cash invested × 100 → %
Tax-Optimized ROI™ (Cost Seg+IIDD)
Return on investment including potential cost-segregation tax savings and Inflation Induced Debt Destruction® (IIDD).
Gross equity income (with cost seg and IIDD)
/ Cash invested × 100 → %
Potential Cost Seg Tax Savings
Cost segregation may accelerate depreciation by identifying eligible property components with shorter recovery periods. Typical results vary widely; this projection estimates potential first-year tax savings at 6% of the property’s total Price. Actual eligibility and savings depend on the property, ownership, tax law, and the investor’s tax situation. Consult qualified tax and cost-segregation professionals. Results may vary and no amount is guaranteed.
6% × Total property Price
Inflation Induced Debt Destruction® (IIDD)
Trademark of Jason Hartman. Permission to use with attribution.
As inflation happens, the real value of your loan balance goes down.
Projected inflation rate (as a percent) × First mortgage loan amount
Loan Origination and/or Buydown Points
Mortgage points are upfront fees paid to your lender at closing to lower your interest rate. Each point costs 1% of the total loan amount and typically reduces your interest rate by 0.25%. This practice is known as "buying down" the rate.
Discount Points vs. Origination Points
Discount Points: Optional prepaid interest you purchase to secure a permanently lower interest rate and smaller monthly payments for the life of the loan.
Origination Points: Required lender fees (usually 1% of the loan) to cover the processing, underwriting, and creation of your loan. These do not lower your interest rate.
An Example of the Math:
If you take out a $400,000 mortgage, one discount point costs $4,000. If your initial interest rate is 6.5%, paying for one point would typically lower your rate to 6.25%.
Are They Worth It?
Whether points are a good idea depends on your break-even point—the exact month when your cumulative monthly savings equal the upfront cost of the points.
When they make sense: If you plan to stay in your home or keep your mortgage for many years, the monthly savings will eventually outweigh the upfront cost.
When to skip them: If you plan to sell the home or refinance within a few years, you likely won't own the property long enough to recoup the upfront fee.
Closing Costs
Closing costs vary by area and specific deal. They usually include lender fees (not including points or buydowns), title or escrow fees, some government fees, recording fees but not prorations, prepaids or escrow accounts because those are ongoing ownership costs, not closing costs. Be sure to get an estimate from your lender and/or title/escrow agent.
Gross rent
Total rental income. Year 1 uses your current rent; later years:
Prior year rent × (1 + Rental growth rate)
Operating expenses
All property expenses. In later years each line grows with inflation (management with rental growth).
Property tax + Insurance + Management + Leasing + Association fees + Maintenance + Other
Principal reduction
The part of your mortgage payment that pays down the loan balance each year (not interest). From the first and second loans combined.
Appreciation
Increase in the property's value from one year to the next. Market value grows at your assumed appreciation rate.
This year's market value
− Last year's market value
Gross equity income
The total gain from the property in that year.
Cash flow + Principal paydown + Potential cost seg tax savings + IIDD + Appreciation
Capitalization rate (10-year)
Uses current value instead of purchase price.
Net operating income / Market value (that year) × 100 → %
Return on equity
Shows how well your equity is performing.
Gross equity income / Equity (market value − loan balance) × 100 → %
Market value
Estimated value each year. Year 1 starts from initial market value.
Prior year's market value × (1 + Appreciation rate)
Loan balance
How much you still owe on the first and second mortgages. It goes down each year as you pay principal.
Equity
Your stake in the property.
Market value
− Loan balance
Loan-to-value ratio
Your loan balance as a percent of the property's value. Lower means you own a bigger share.
Loan balance / Market value × 100 → %
Assumptions
This is a projection from our Local Market Specialists. If you would like to set your own assumptions, sign up at PropertyTracker.com and unlock a suite of investment tools.
Gov CPI Inflation
This report uses the FRED CPIAUCSL year-over-year percentage for the CPI month shown in the row label (for example, Gov CPI Inflation May '26). Gov CPI is a standard inflation measure, and this rate is used anywhere the report needs an inflation assumption, including Inflation Induced Debt Destruction® (IIDD), real interest rate calculations, and expense-growth projections where applicable.
Potential cash-out refi
Cash you could take out if you refinanced at the rate shown. Positive result means cash out.
(Refinance loan-to-value % × Market value) + Loan balance
(loan balance is negative)
Closing costs (sale)
Estimated cost to sell (e.g. agent commission, transfer taxes). Shown as a negative.
Closing cost % × Market value
Proceeds after sale
What you'd receive from selling.
Equity + Closing costs of sale
(closing costs are negative)
Cumulative cash flow
Total of all cash flow from year 1 through this year.
Cash flow (year 1) + Cash flow (year 2) + … + Cash flow (this year)
Net profit
If you sold at the end of this year.
Sale proceeds + Cumulative cash flow + Initial cash invested
(initial investment is negative)
Internal rate of return (IRR)
An annual return rate that accounts for when you put money in and when you get it back, including the sale. Calculated from your initial investment and the series of cash flows plus sale proceeds in the chosen year. Good for comparing different investments.
Return on investment (sale)
If you sold at the end of this year.
Net profit / Cash invested × 100 → %
Rents received
Total rental income for the year from your tracker. Times your ownership share if applicable.
Rent + Pet fees + Damage credits + Reimbursements + Other income
Depreciation
Tax deduction for the wear and tear on the building. Special rules for the first year and year of sale (mid-month), and for GO Zone.
Basis / Life (years)
Total expenses (Schedule E)
All expenses for the year for Schedule E.
Actual expenses (operating + mortgage interest + loan fee amortization + other)
+ Depreciation
Net income (or loss)
The number you use for Schedule E on your tax return.
Total income
− Total expenses
Amortization of loan fees
Loan fees spread over the life of the loan. Straight-line over the term; special rules for first year and payoff year. You deduct that portion for tax purposes.
Total loan fees / Loan term (years)
