Does the building make money before the loan? NOI strips out your financing entirely — useful for comparing a leveraged deal to an all-cash deal on the same terms. Banks use NOI to underwrite commercial loans. If your NOI is negative, no amount of low financing will fix the deal.

What you actually collect after accounting for the time the unit sits empty. A 8% vacancy rate on $1,500/month rent = $120/month you'll never see. Most investors model 8–10% vacancy even in strong markets as a conservative baseline.

The real number. After every bill goes out — including the loan — what's left? Positive cash flow means the tenant is funding your wealth. Negative means you're subsidizing the property from your W-2. Target at minimum $100–200/month per door as a buffer; $200+ is genuinely good on a C-class SFR.

How hard is YOUR money working? Total cash invested = down payment + closing costs + any immediate repairs. A 10% CoC means you get $1 back for every $10 invested, per year. Most serious investors won't touch a deal under 8%. Below 5% and a diversified index fund beats you with zero effort. This is the most actionable early-stage metric.

What return would you get if you paid all cash? Ignores your loan entirely. Best used for comparing two properties in different markets or with different financing. Coastal markets: 3–5%. Midwest/Southeast C-class: 7–10%. A 7%+ cap rate in a stable market is solid. Never use cap rate in isolation — it ignores your debt service and actual cash invested.

A quick-and-dirty screening tool. Lower GRM = better deal. A $200k property renting for $1,500/month = GRM of 11.1. Investors in Midwest/Southeast cash flow markets often target GRMs below 10–12. Coastal markets routinely run 20–30+, which is why they rarely pencil for cash flow. Use GRM for a 10-second gut check before doing full underwriting.

Capital expenditures — the big ticket items that don't show up monthly but hit hard when they do. Roof, HVAC, water heater, electrical panel, plumbing, flooring. On a 1940s–1980s SFR, budget $75–150/month or 1% of purchase price per year. Skipping this reserve is the most common mistake new landlords make — and the one that turns a break-even deal into a loss.

A capital recycling strategy: buy a distressed property below market, add value through renovation, stabilize with a tenant, then do a cash-out refinance against the new appraised value (ARV) to pull your original investment back out. The goal is to leave little to no capital in the deal while still owning a cash-flowing asset. Works best in markets where you can force equity through rehab — C/B-class Midwest and Southeast markets. Risk: ARV appraisals don't always cooperate, and refi markets change.

Michigan homeowners who occupy their property as a primary residence receive an 18% reduction in taxable value via the PRE. When you convert to a rental, you must file to rescind the PRE — and your tax bill jumps. For Redford properties, verify your post-rescission tax bill directly with Redford Township before locking in your rental projections.