Every listing on this site runs the same formulas, in the same order. You can reproduce them with a calculator.
Gross yield
Annual rent divided by price. An $85,000 home renting for $1,200 a month has a gross yield of 16.9%. It ignores every cost, so it is only a first screen.
Net operating income (NOI)
Annual rent, minus vacancy and credit loss, minus operating expenses: management, leasing, repairs, a CapEx reserve, property taxes, insurance and small administrative costs. Mortgage payments are not operating expenses.
Cap rate
NOI divided by price. In Jackson, taxes on rental homes and insurance are heavy, so expenses often take 55% to 70% of the rent actually collected. That is why we screen for homes where monthly rent is at least about 1.4% of price.
Cash-on-cash return
Annual cash flow after any loan payments, divided by the cash you put in: down payment, closing costs and lender fees. For an all-cash purchase it is close to the cap rate.
Three scenarios
Conservative, base and optimistic change vacancy, repairs, CapEx and tenant turnover. When we have the actual tax bill or insurance policy, it replaces the estimate in all three. None of the scenarios is a guarantee.