Rental Property Simulator · Summary

4.2% IRR — trails an index fund by $26K over 10 years

Based on a $300K property at $2,300/mo rent, 7% mortgage, and a 10-year hold.

Deal verdict

Pass

Trails an index fund by $26K over 10 years

Cash flow stays negative for the full 10 years (peak $49K out of pocket); net wealth never catches an index fund within the 10-year hold. After 10 years you’d still trail an index fund by $26K.

Year-1 cap rate

3.8%

Cash-on-cash

-8.0%

10-yr IRR

4.2%

Equity multiple

1.65×

Net wealth: rental vs. index fund

Wealth if you sold today — equity + banked cash flow, less your initial cash. Mostly paper wealth, not cash in hand.

Rental propertyIndex fund @ 7.0%

Operating cash flow, year by year

Real cash, in and out. Negative bars = you fed the property; the line tracks what you’ve actually banked.

Positive yearNegative yearCumulative cash flow

Where does your profit come from?

Total profit, decomposed. Tax effects are shown separately below.

Operational cash flow-$49K
Appreciation+$103K
Principal paydown+$32K
Selling costs-$24K
Closing costs-$8K

Net profit (rental, pre-tax)

+$54,012

Index-fund alternative

+$79,790

Rental behind by $26K vs. parking the same capital in an index fund.

Scenario assumptions

Purchase price

$300K

Cash to close

$83K (25% down)

Mortgage

7% / 30-yr

Monthly rent

$2,300/mo

Vacancy

8%

Property management

8%

Property tax

1.5% of value/yr

Insurance

$1,500/yr

Maintenance + CapEx

2.0%/yr

Rent growth

3%/yr

Expense growth

3%/yr

Hold period

10 years

Exit

Appreciation @ 3%/yr

Selling costs

6%

Index-fund alternative

7%/yr

What’s driving this

Year-1 DSCR of 0.63 means rents don't cover the mortgage out of the gate; you'd be feeding the property out of savings. About 120% of upside comes from appreciation — the deal is sensitive to your 3%/yr assumption. Over 10 years an index-fund alternative is ahead by $26K — the rental's spread doesn't compensate for its operating burden in this scenario.

Edit This Scenario

This summary is for educational purposes only and does not constitute investment, tax, or legal advice. Headline metrics, IRR, and the verdict are based on the assumptions shown above; actual results will vary with operating reality, market conditions, and your specific tax situation. Depreciation figures are illustrative — they assume full ability to use the shield each year. Consult a qualified CPA and your local market knowledge before committing capital.