What each figure means
- Net operating income: the rent actually collected over a year, after the empty weeks, minus the running costs. The loan is left out, so two buyers of the same place get the same figure.
- Cap rate: net operating income divided by the price. It compares places with each other, whatever the financing.
- Cash flow: what is left each month once the loan is paid as well. The figure that says whether the place pays for itself or needs money from you.
- Cash-on-cash return: a year's cash flow divided by the cash you put in, down payment and closing costs together. The return on your own money.
- Gross yield: a year's rent divided by the price, before any cost. Quick to work out, and flattering.
What the calculator leaves out
Income tax on the rent, the part of each loan payment that repays capital and so builds your equity, any rise or fall in the value of the place, and large one-off repairs such as a new roof or kitchen. Each can matter more than a point of cap rate.
Use your own figures
The price, taxes and insurance filled in are a starting point, not an estimate for Gastonia: replace them with the asking price, the actual tax bill and a real insurance quote. For the rent, compare with the places listed in Gastonia. If you mean to let by the night, check first whether the town requires a short-term rental permit, and what lodging taxes apply.
Once it is bought
Listing on Gastonia Rent is free, with no commission on any rental: list your property. The rent increase calculator helps when the lease comes up for renewal.