Rental Property Deal Analysis: Complete Example With Real Numbers

Theory is useful. Seeing a full analysis from start to finish is better. Let's walk through a real-world example: a 6-unit apartment building listed at $580,000. We'll calculate every metric, stress-test the deal, and arrive at a buy/pass decision.

The Property

• Type: 6-unit apartment building (three 2BR/1BA, three 1BR/1BA)
• Location: B-class neighborhood in a mid-size metro
• Year built: 1985, renovated 2019 (new roof, updated kitchens)
• Listing price: $580,000
• Current occupancy: 100% (all 6 units occupied)

Step 1: Income Analysis

Current Rent Roll

Current gross annual rent: $74,100. Market-rate gross: $80,100. That's a $6,000/yr upside as leases renew — but we analyze at current rents first.

Add other income: laundry ($2,400/yr), late fees ($600/yr). Total EGI: $71,913.

Step 2: Expense Analysis

Step 3: Net Operating Income

Step 4: Financing

• Purchase price: $580,000
• Down payment: 25% = $145,000
• Loan amount: $435,000
• Rate: 7.0% (30-year fixed)
• Monthly payment: $2,894
• Annual debt service: $34,728
• Closing costs: $11,600

Step 5: All Key Metrics

Step 6: The Verdict at Asking Price

At $580,000, this deal essentially breaks even. Zero cash flow, 1.00 DSCR (barely covers the mortgage), and 0% cash-on-cash. No lender will fund this — most require 1.25 DSCR minimum.

The seller's P&L showed $16,900 in "cash flow" because they:

1. Didn't include property management ($5,753)
2. Didn't budget CapEx reserves ($5,034)
3. Understated maintenance by $2,400
4. Used 5% vacancy instead of 7% ($1,482)

Total adjustments: $14,669. Their "$16,900 cash flow" is really $2,231 — before we even consider whether their other numbers were accurate.

Step 7: Finding the Right Price

What price would make this deal work at our criteria (8% CoC, 1.25 DSCR)?

Working backward from a target 1.25 DSCR:

Now checking the CoC at that price:

To hit 8% CoC, the price needs to drop further. The max offer that satisfies both criteria is approximately $430,000 — a 26% discount from asking.

Step 8: Stress Testing at $430,000

The Counter-Argument: Rent Upside

We analyzed at current rents ($6,175/mo). At market rents ($6,675/mo), NOI increases by ~$5,100 to $39,826. At $430,000 purchase price:

This gives negotiation room. You might offer $460,000 knowing that market-rate rents (achievable within 12–18 months) push the deal solidly into your criteria.

How DealForge Would Analyze This

This entire analysis — income, expenses, metrics, stress test, max offer — is what DealForge does automatically. Enter the property details and financing, and the platform generates:

• All metrics (NOI, cap rate, CoC, DSCR, IRR) in real time
• A Max Offer Calculator that back-solves for your target return
• Recession stress test across vacancy, rent, and expense shocks
• Rent comp analysis to verify market rates
• Exportable PDF for your partners or lender

Try the demo with a sample property, or create an account to run your own deals.

Bottom Line

This deal looked good on the seller's marketing sheet ($16,900 cash flow!) but actually produced zero cash flow at asking price once we used realistic expenses. The right price was $430,000–$460,000 — 20–26% below asking.

Every deal deserves this level of analysis. Sellers have optimistic numbers. Your job is building your own model with your own assumptions and finding the price where the deal actually works.

Related reading: How to Analyze a Rental Property · What Is a Good Cash-on-Cash Return · What DSCR Do Banks Require · Rental Property Analysis Checklist · Real Estate Contingency Planning