PITI
Principal, Interest, Taxes, and Insurance — the full monthly mortgage burden. Taxes and insurance belong here, not in operating expenses, so they are never double-counted.
NOI — Net Operating Income
Effective gross income minus operating expenses (utilities, repairs, management, CapEx, misc) — before taxes, insurance, and debt service. NOI tells you if the property is profitable as a business, independent of how it is financed.
Cash Flow
NOI minus full PITI (principal, interest, taxes, and insurance). Operating expenses exclude taxes and insurance, so the full PITI is deducted here. Positive cash flow means the property pays you after all costs.
DSCR — Debt Service Coverage Ratio
NOI divided by P&I debt service only (Underwrite tab). A DSCR above 1.25 is healthy. Below 1.0 means income does not cover the mortgage. In Manager mode, the coverage ratio uses full PITI since separate P&I is not entered.
Cap Rate
NOI divided by purchase price. Useful for comparing properties independent of financing. A 7% cap rate means you earn 7% of the purchase price annually from operations.
Cash-on-Cash Return
Annual cash flow divided by total cash invested (down payment plus closing costs if paid in cash). Measures the return on your actual out-of-pocket investment.
The 1% Rule
A quick filter: monthly rent should be at least 1% of purchase price. A $200K property should rent for $2,000/mo minimum. It is a screening tool only — not a substitute for full underwriting.
Vacancy Rate
The percentage of time the property sits empty. Budget 5-10% for single family, 5-8% for multifamily in stable markets. Ignoring vacancy is one of the most common rookie mistakes.
Reserves
Cash set aside for repairs, vacancies, and emergencies. Rule of thumb: keep 3-6 months of total expenses in reserves before buying a rental. Without reserves, one bad month can break you.