Know a rental's return in 10 seconds — then find out if it actually cash flows.
Cap rate — short for capitalization rate — is the rental world's quickest honesty check. Take the property's NOI (net operating income: the yearly rent left over after operating expenses like taxes, insurance, and maintenance, but before any mortgage) and divide it by the purchase price. The result is the return the building itself produces, as if you had paid all cash. It lets you compare a $300,000 duplex against a $900,000 fourplex on equal footing — no financing tricks, just the property doing the talking.
DSCR — debt service coverage ratio — answers the question cap rate deliberately ignores: once you add the mortgage, does the income actually cover the payment? It is NOI divided by a year of mortgage payments. At 1.0 the property covers its debt exactly, with nothing to spare. Lenders read DSCR the way a doctor reads a pulse, and most DSCR lenders want to see roughly 1.2 or better as a rule of thumb.
Cap rate ignores financing entirely — that is its job. But two investors can buy the same building at the same cap rate, and one cash flows while the other feeds the deal every month, purely because of the loan terms. The cap rate is where the analysis starts, not where it ends. The full Rentals analyzer pressure-tests the whole picture: financing, vacancy, real expenses, and what happens when something goes wrong.