Quick answer
Before you spend hours analyzing a property, check ten numbers in under 15 minutes. These are the inputs that kill most deals early: whether rent supports the price, whether the market vacancy is acceptable, whether operating expenses are realistic, and whether the debt service leaves any margin. If a deal survives all ten checks at honest inputs, it is worth a full analysis. If it fails any one of them badly, move on.
Who this is for
This checklist is for investors who are screening multiple deals and need a repeatable process to identify the ones worth deeper analysis. It is written for buy-and-hold rentals, but many of the checks apply to BRRRR acquisitions as well.
For the full 7-step analysis once a deal survives triage, see How to Analyze a Rental Property. For the strategy guides that explain how each return metric works, see Real Estate Investing Strategies Compared.
The 10 numbers — and how to check them fast
1. Gross monthly rent (from comps, not the listing)
The first number to pull is what the property would rent for today at market rate.
Search active rental listings within a half mile for comparable bedroom count, square footage, and condition. Find three comparable listings and use the lower-to-middle of the range. Do not use the seller's stated rent. Do not use Zillow's Zestimate. Use actual comparable listings — Zillow, Redfin, Apartment List, and Rentometer are all free sources.
Time: 5–10 minutes.
See Free Resources for Real Estate Market Research for free sources to find rental comps quickly.
2. The 1% rule pass/fail
Take the gross monthly rent and divide by the purchase price. If the result is 1% or higher, the deal passes this screen and may be worth a full analysis. If it is well below 1%, that does not automatically disqualify it — but it means the deal needs to survive on weaker income relative to price, which is harder to make work.
1% ratio = Monthly rent ÷ Purchase price
Use the 1% rule calculator for a quick pass/fail.
The 1% rule is a filter, not a buying criterion. Some markets routinely trade at 0.7–0.9% and still produce acceptable returns. Some deals that pass 1% do not cash flow after real expenses.
3. Market vacancy rate (census, not seller's assumption)
Look up the rental vacancy rate for the property's ZIP code or census tract on data.census.gov (American Community Survey, table B25004). This is the census rental vacancy rate — the most reliable neutral source available. For national context, FRED tracks U.S. rental vacancy quarterly — 7.3% as of Q1 2026.
Compare it to what the seller's pro forma assumes. A seller showing 3% vacancy in a ZIP with 9% census vacancy has overstated effective income by six percentage points.
For more on how vacancy flows through your return metrics, see Vacancy Rate: The Metric That Can Break a Rental Pro Forma.
4. Effective gross income
Apply the census vacancy rate to your market rent to get effective gross income — what the property will actually collect on average once the vacant periods are accounted for.
Effective gross income (monthly) = Market rent × (1 − Vacancy rate)
Effective gross income (annual) = Monthly EGI × 12
5. Quick expense estimate (50% rule check)
Use the 50% rule as a fast expense screen before you build out every line item. Assume operating expenses consume 50% of gross rent (not effective gross income) — taxes, insurance, maintenance, management, reserves, and leasing. Property tax rates vary significantly by state; the Tax Foundation's property tax data is a useful reference to sanity-check that component in any market.
Estimated operating expenses = Gross rent × 0.50
The 50% rule calculator runs this automatically. The 50% rule overstates expenses for newer properties in some markets and understates them for older or lower-income properties. Use it as a screening check, not as a final number.
6. Quick NOI estimate
Subtract estimated operating expenses from effective gross income to get a rough NOI.
Quick NOI = Annual EGI − Annual operating expenses
This is not a final NOI — it uses the 50% rule for expenses rather than verified line items. But it gives you a defensible enough number to run the next two checks.
Use the NOI calculator for the full calculation once you move into deeper analysis.
7. Cap rate vs. local market
Divide your quick NOI by the purchase price to get a rough cap rate. Then compare it to what similar properties are trading at in that market.
Quick cap rate = Quick NOI ÷ Purchase price
Is this competitive with local alternatives? If other properties in the same market are trading at 6–7%, this deal is priced at a premium relative to the income it produces. That premium needs a reason — better location, better condition, more stable tenant base — otherwise it is just an overpriced deal.
Use the cap rate calculator to verify.
8. Estimated debt service
Calculate your expected monthly mortgage payment at your anticipated loan terms. You need a realistic loan amount and interest rate — not a national average, but what you are actually being quoted.
For a quick estimate, use the mortgage payment calculator with:
- Loan amount = Purchase price × (1 − down payment %)
- Annual rate from your lender
- Term: 30 years for most investment property financing
9. DSCR check
DSCR is quick NOI divided by annual debt service. It tells you whether the property can carry its own loan from rental income. Most lenders require 1.20 or higher.
DSCR = Quick NOI ÷ Annual debt service
Use the DSCR calculator.
If DSCR is below 1.0, the deal needs significant price reduction, restructured financing, or a different strategy. Do not continue with a full analysis on a deal with a DSCR below 1.0 unless you have a clear path to fixing the inputs.
10. Cash flow check
Cash flow is effective gross income minus all expenses and debt service.
Monthly cash flow = Monthly EGI − Monthly expenses − Monthly debt service
Negative $356/month is not a stress test result — it is the base case. This deal subsidizes itself from your personal cash every month at current inputs and price.
Run it in the cash flow calculator.
The 10-number summary
| # | Check | Example | Pass? |
|---|---|---|---|
| 1 | Gross market rent | $1,750/month | — |
| 2 | 1% rule | 0.9% | Weak — watch margins |
| 3 | Census vacancy | 8% | Acceptable |
| 4 | Effective gross income | $1,610/month | — |
| 5 | 50% rule expenses | $875/month | — |
| 6 | Quick NOI | $8,820/year | — |
| 7 | Cap rate | 4.5% | Below market — overpriced |
| 8 | Debt service | $13,092/year | — |
| 9 | DSCR | 0.67 | Fail — below 1.0 |
| 10 | Cash flow | −$356/month | Fail — negative base case |
This example deal fails at checks 9 and 10. The triage took about 15 minutes and saved hours of unnecessary due diligence.
What to do when a deal fails triage
If one or two checks fail narrowly: A deal that fails check 9 or 10 because the price is $15,000 too high may still be worth making an offer at a lower price. Use your NOI and the market cap rate to back into a fair price, then decide whether the gap is bridgeable in negotiation.
If DSCR is below 1.0 with no path to fixing it: Move on. A deal that cannot pay its own mortgage from rental income is not a real estate investment — it is a subsidy.
If the 1% ratio is well below 0.7% in a non-coastal market: The income does not support the price for a buy-and-hold strategy. Consider whether a different strategy — house hacking, BRRRR, or value-add — changes the math, or whether the property is simply overpriced for investors.
If the market vacancy is structurally high: Market-level data is harder to negotiate around than property price. High structural vacancy means real demand issues that outlast individual deals. Understand the cause before proceeding. For national context on housing demand and supply shortfalls, the Harvard Joint Center for Housing Studies 2025 report and the NLIHC annual GAP report provide useful background on where rental demand is structural vs. cyclical.
When to move from triage to full analysis
A deal is worth a full analysis when:
- Cash flow is positive at base case inputs (checks 4–10 all pass)
- DSCR is at or above 1.20
- Cap rate is competitive with local alternatives
- Market vacancy is stable or below the metro average
A deal that passes those four conditions is worth the next 60–90 minutes of deeper work: verifying each expense line, pulling actual comps, modeling financing precisely, and stress testing the full model.
For the full analysis workflow, see How to Analyze a Rental Property.
FAQ
How long should the 10-number check take?
For a market you know well with access to your standard comp sources: 10–15 minutes. For an unfamiliar market where you need to pull census data and find comps from scratch: 20–30 minutes. The point is to be systematic, not fast — you are not trying to rush a buying decision, you are trying to stop spending time on bad deals.
Should I triage every property I look at?
Yes. Any property you are considering for a full analysis should go through these ten checks first. The exceptions are deals you already know deeply — a property in a market where you have done five analyses, with a seller's package that is already fully documented and comparable to past deals you have underwritten.
What about fix-and-flip deals?
Flip triage uses different primary checks: ARV from comparable sales, estimated rehab, the 70% rule, holding costs, and selling costs. The core logic is similar — eliminate bad deals early — but the inputs are different. See the Fix and Flip Data Checklist.
What if the seller's rent matches my comps?
That is a good sign. It means you can trust the income assumption, or at least not immediately disqualify it. It does not mean you skip the expense and vacancy checks — those are where sellers most reliably adjust the numbers in their favor.
Should I use the GRM instead of the 1% rule?
The GRM (Gross Rent Multiplier) is purchase price divided by annual gross rent. It is the inverse of the 1% rule. A 1% deal has a GRM of about 8.3; a 0.7% deal has a GRM of about 12. Use whichever framing you prefer — they test the same relationship between price and gross rent.
How Temelios can help
This article is for education only and is not financial, legal, tax, or investment advice. Consult qualified professionals before buying property.