What Financial Metrics Should I Use to Evaluate My Rental Property?
A rental property may look unprofitable month-to-month but perform extremely well as a long-term investment.
Audience: Property owners who want to understand how to measure their rental's financial performance.
Cash flow matters, but it's only part of the picture. Here are the key metrics that give you a fuller view of how your investment is actually performing.
FAQs
Is cash flow the only metric I should focus on? No. Cash flow shows whether the property earns or costs money month-to-month, but it doesn't capture appreciation, equity growth, or long-term return.
What if my property doesn't cash flow right now? That's common, especially in the early years. Many rentals that break even or lose a little monthly become highly profitable over time through appreciation and mortgage paydown.
What's the most important metric for long-term investors? Total return on investment — which factors in cash flow, appreciation, principal paydown, and rent growth over time. This is where real wealth is built.
What metrics should I watch in the first few years? Cash flow, vacancy rate, repair costs, and expense ratio. Early performance is often lower due to initial repairs and loan structure.
Does MoveZen help me track these? Yes. Many of these figures are available in your Owner Portal and reports!