--- title: "How I Underwrite Every Rental: My Standard Numbers | Addicted to ROI" description: "The exact assumptions I use to underwrite rental properties after 17+ years: vacancy, CapEx, cap rate minimums, and the returns I walk away from." lang: en json-ld: | [ { "@context": "https://schema.org", "@type": "Organization", "@id": "https://addictedtoroi.com/#organization", "name": "Addicted to ROI", "url": "https://addictedtoroi.com", "logo": { "@type": "ImageObject", "url": "https://addictedtoroi.com/images/logo.png" }, "description": "Live your best life funded by your investments. Real estate, taxes, travel, and business, by Jennifer Beadles.", "founder": { "@id": "https://addictedtoroi.com/#jennifer" }, "sameAs": [ "https://agentsinvest.com", "https://doorprofit.com", "https://repstime.com", "https://strhours.com", "https://kidspayroll.com", "https://rentstager.com" ] }, { "@context": "https://schema.org", "@type": "WebSite", "@id": "https://addictedtoroi.com/#website", "url": "https://addictedtoroi.com", "name": "Addicted to ROI", "publisher": { "@id": "https://addictedtoroi.com/#organization" }, "potentialAction": { "@type": "SearchAction", "target": { "@type": "EntryPoint", "urlTemplate": "https://addictedtoroi.com/blog/?q={search_term_string}" }, "query-input": "required name=search_term_string" } }, { "@context": "https://schema.org", "@type": "Person", "@id": "https://addictedtoroi.com/#jennifer", "name": "Jennifer Beadles", "url": "https://addictedtoroi.com/about/", "jobTitle": "Founder, Addicted to ROI", "description": "Real estate investor and founder of Addicted to ROI. Built an 8-figure rental portfolio across multiple states and teaches everyday investors how to build passive income.", "worksFor": { "@id": "https://addictedtoroi.com/#organization" }, "sameAs": [ "https://agentsinvest.com", "https://doorprofit.com", "https://repstime.com", "https://strhours.com", "https://kidspayroll.com", "https://rentstager.com" ] }, { "@context": "https://schema.org", "@type": "Article", "mainEntityOfPage": { "@type": "WebPage", "@id": "https://addictedtoroi.com/blog/how-i-underwrite-rental-properties/" }, "headline": "How I Underwrite Every Rental: My Standard Numbers", "description": "The exact assumptions I use to underwrite rental properties after 17+ years: vacancy, CapEx, cap rate minimums, and the returns I walk away from.", "image": "https://images.unsplash.com/photo-1724482606633-fa74fe4f5de1?crop=entropy&cs=tinysrgb&fit=max&fm=jpg&q=80&w=1080", "datePublished": "2026-07-08", "dateModified": "2026-07-08", "author": { "@id": "https://addictedtoroi.com/#jennifer" }, "publisher": { "@id": "https://addictedtoroi.com/#organization" }, "speakable": { "@type": "SpeakableSpecification", "cssSelector": [ ".tldr-answer", "h1" ] } }, { "@context": "https://schema.org", "@type": "BreadcrumbList", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://addictedtoroi.com" }, { "@type": "ListItem", "position": 2, "name": "Blog", "item": "https://addictedtoroi.com/blog" }, { "@type": "ListItem", "position": 3, "name": "Deal Analysis", "item": "https://addictedtoroi.com/blog?category=deal-analysis" }, { "@type": "ListItem", "position": 4, "name": "How I Underwrite Every Rental: My Standard Numbers", "item": "https://addictedtoroi.com/blog/how-i-underwrite-rental-properties/" } ] }, { "@context": "https://schema.org", "@type": "FAQPage", "mainEntity": [ { "@type": "Question", "name": "What vacancy rate should I use when analyzing a rental property?", "acceptedAnswer": { "@type": "Answer", "text": "At least 5% for single family in a strong market, and 8 to 10% for small multifamily. The number has to cover both physical vacancy and economic vacancy (tenants who don't pay). 2% is not a real number." } }, { "@type": "Question", "name": "What is a good cap rate for a rental property right now?", "acceptedAnswer": { "@type": "Answer", "text": "My minimum is 6.25%, calculated on actual rents and expenses rather than the broker's proforma. Even compressed big-metro markets trade B-class buildings around 6.25 to 6.5, so smaller markets should meet or beat that." } }, { "@type": "Question", "name": "What is a good cash-on-cash return in a high-rate market?", "acceptedAnswer": { "@type": "Answer", "text": "I want at least 6%, because passive alternatives like high-yield savings pay around 4.5% with zero effort. But weigh tenant quality too: a lower yield with a stronger tenant often outperforms a high paper yield in practice." } } ] } ] --- [![Addicted to ROI](/images/logo.png)](/) [Travel](/pillars/travel/)[Real Estate](/pillars/real-estate/)[Tax Savings](/pillars/tax-savings/)[Business](/pillars/business/)[Paths](/paths/)[Blog](/blog/)[Tools](/tools/)[Apps](/software/)[About](/about/) [Login](https://members.addictedtoroi.com/) Subscribe [Travel](/pillars/travel/)[Real Estate](/pillars/real-estate/)[Tax Savings](/pillars/tax-savings/)[Business](/pillars/business/)[Paths](/paths/)[Blog](/blog/)[Tools](/tools/)[Apps](/software/)[About](/about/)[Login](https://members.addictedtoroi.com/) Contents 1. [01 My standard assumptions ](#my-standard-assumptions) 2. [02 Vacancy: physical plus economic ](#vacancy-physical-plus-economic) 3. [03 CapEx and repairs: the savings account ](#capex-and-repairs-the-savings-account) 4. [04 Appreciation: 4% is the baseline ](#appreciation-4-is-the-baseline) 5. [05 Cap rate: 6.25% minimum, on actuals ](#cap-rate-625-minimum-on-actuals) 6. [06 Cash-on-cash: beat the savings account, then some ](#cash-on-cash-beat-the-savings-account-then-some) 7. [07 Quick estimating tricks ](#quick-estimating-tricks) [Home](/)/ [Blog](/blog/)/ [Real Estate](/pillars/real-estate/) Deal Analysis # How I Underwrite Every Rental: My Standard Numbers After 17+ years and a lot of deals, my underwriting assumptions have settled into a standard set. Here are the exact numbers I plug in for vacancy, CapEx, cap rate, and cash-on-cash, and the returns I walk away from. July 8, 2026 8 min read Contents 1. [01\. My standard assumptions](#my-standard-assumptions) 2. [02\. Vacancy: physical plus economic](#vacancy-physical-plus-economic) 3. [03\. CapEx and repairs: the savings account](#capex-and-repairs-the-savings-account) 4. [04\. Appreciation: 4% is the baseline](#appreciation-4-is-the-baseline) 5. [05\. Cap rate: 6.25% minimum, on actuals](#cap-rate-625-minimum-on-actuals) 6. [06\. Cash-on-cash: beat the savings account, then some](#cash-on-cash-beat-the-savings-account-then-some) 7. [07\. Quick estimating tricks](#quick-estimating-tricks) tl;dr My standard underwriting assumptions after 17+ years: 5% repairs, 5% CapEx, 8 to 10% property management, 5 to 10% vacancy, and 4% appreciation with a 0% floor case. I want a 6.25% minimum cap rate on actual rents, at least 6% cash-on-cash, and a 1.2 DSCR. I walk when a deal only pencils on the seller's proforma numbers. Every week I analyze deals live with investors in our community, and the same question comes up constantly: what numbers should I plug in? Vacancy, maintenance, CapEx, appreciation, and what counts as a "good enough" return. After 17+ years and a lot of deals, my underwriting assumptions have settled into a standard set. Here they are, with the reasoning, so you can stop guessing. You can plug them into any deal, or run them fast in my [deal analysis calculator](https://addictedtoroi.com/tools/deal-analysis-calculator/). The goal is balance. You don't want to be so conservative that no deal ever pencils and you miss the property's real potential, but you can't be aggressive either, because the deal has to survive reality, not a spreadsheet fantasy. ## My standard assumptions Line item My number Notes Repairs & maintenance 5% Don't get cute and cut this CapEx 5% Think of it as a savings account for big items Property management 8 to 10% Even if you self-manage, underwrite it Vacancy 5 to 10% Never 2%. More below Appreciation 4% The historic baseline. Underwrite 0% as your floor case Minimum cap rate 6.25% On actuals, not proforma Minimum cash-on-cash ~6% 8%+ is going to take work to find Minimum DSCR 1.2 What lenders need to see If you want the full framework behind these numbers, including how I build a buy box first, I laid it all out in [how to underwrite a multifamily deal](/blog/how-to-underwrite-a-multifamily-deal/). ## Vacancy: physical plus economic I see investors plug in 2% vacancy, which is about one week a year. That's a fantasy number. Vacancy has to cover physical vacancy (the unit sitting empty between tenants) and economic vacancy (a tenant in place who isn't paying). For a single family rental in a strong market, 5% is realistic. For small multifamily, I like to start at 10%, and 8% is roughly one month a year. And if your plan involves big rent increases on inherited tenants (say, moving someone from $865 to $1,200), expect first-year vacancy to run higher, because that's a big jump for most tenants and some will leave. ## CapEx and repairs: the savings account Repairs and maintenance stays at 5%. I've watched investors trim it to a few hundred dollars a year to make a deal pencil, and one repair call eats the whole budget. CapEx works almost like a savings account for the big-ticket items. Around $900 a year accumulates to roughly $4,600 over five years, which is about what an HVAC replacement costs. The building doesn't care that your spreadsheet skipped that line. If you want to size the buffer properly, here's [how much cash reserve you should keep per rental property](/blog/how-much-cash-reserve-should-you-keep-per-rental-property/). One nuance for older buildings: if the major systems (plumbing, electrical, roof, foundation, siding) have been updated, standard 5% and 5% reserves can stand. If they haven't, either budget a renovation and assume you do the work in year one, or raise the reserves. And verify with a couple of property managers either way. ## Appreciation: 4% is the baseline Tracking from the 1980s to today, historic US appreciation runs about 4% a year. If you want a safe baseline, use 4%. Some markets run hotter, but I also like to underwrite at zero appreciation as the floor case, because appreciation sort of matters and sort of doesn't until you actually have an exit event. Where appreciation shows up is in your total return, which stacks cash-on-cash, principal reduction, and appreciation, all levered against your down payment rather than the full property price. That's why flipping a 4% appreciation assumption on can move total ROI from single digits to 20%+. Know what's driving your number before you fall in love with it. ## Cap rate: 6.25% minimum, on actuals In my opinion, 6.25% should be the minimum cap rate for any deal right now. Even B-class buildings in Phoenix trade around 6.25 to 6.5, so a smaller market should command at least that, arguably more. I go deeper on this in [what is a good cap rate for a rental property in 2026](/blog/what-is-a-good-cap-rate-for-a-rental-property-in-2026/). Two traps here. First, brokers advertise proforma cap rates. Always compute the going-in cap on actual rents and actual expenses. On one duplex we analyzed live, the same building was worth about $275K on proforma rents and closer to $250K on actuals. That gap is your negotiation, or your loss. Second, know your audience: small residential sellers (2-4 units) don't respond to cap rate arguments the way commercial multifamily sellers do. ## Cash-on-cash: beat the savings account, then some Cash-on-cash is just one metric, but here's my benchmark logic: if a high-yield savings account pays around 4.5% for doing nothing, a 3% cash-on-cash on a property that takes real time and effort doesn't compete on income alone. I want to see a minimum of about 6% cash-on-cash right now, and anything close to 8% is going to take some work to find. If you need a refresher on the math, here's [how to calculate cash-on-cash return on a rental property](/blog/how-to-calculate-cash-on-cash-return-on-a-rental-property/). That said, yield isn't everything. Given a 17% cash-on-cash deal at a $1,025 rent point versus a 12% deal at a $1,350 rent point, I take the 12%. Having done this for 17 years, I'm always going to prioritize a higher paying tenant, because they're less drama. High advertised returns in cheap areas quietly assume you're always collecting rent, and ignore turnovers and make-readies. ## Quick estimating tricks - Insurance: square footage times a per-foot rate gets you close. In a higher-rate area like San Antonio, around $0.60/sq ft, so a 5,000 sq ft fourplex runs roughly $3,000 a year. Then get real quotes. - Utilities: always verify who pays water and sewer before underwriting a small multifamily. Single meter means you pay it (and typically bill it back). Separate meters mean tenants handle it. - Seasonal costs: take the annual number (snow removal, landscaping) and stagger it monthly. These are the same numbers I bring to every live deal review. Set them once, apply them the same way every time, and good deals start separating themselves from the ones that only work on the listing agent's spreadsheet. Want to run these assumptions on your own deals? Grab the free Buy and Hold Deal Calculator spreadsheet and the due diligence checklist from my [free resources and downloads](/resources-downloads/) page. _This article is for educational purposes only and is not tax, legal, or financial advice. Consult a qualified CPA or tax attorney about your specific situation._ Addicted to ROI is education and community, not financial or tax advice. Talk to a qualified professional before making investment or tax decisions. ![Jennifer Beadles](/images/founders.jpg) Jennifer Beadles Real estate entrepreneur with 17 years of hands-on investing experience. Built an 8-figure rental portfolio across multiple states and has helped thousands of investors build passive income through the Addicted to ROI community. 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[Subscribe, free →](/newsletter/)[Run a deal in the calculator](/tools/deal-analysis-calculator/) Read next [ ![How to Renovate a Rental You've Never Seen in Person](https://images.unsplash.com/photo-1581578731548-c64695cc6952?w=800&q=80) Investment Strategies ### How to Renovate a Rental You've Never Seen in Person 10 min read → ](/blog/renovate-out-of-state/)[ ![How to Determine Fair Market Rent in a Market You Don't Live In](https://images.unsplash.com/photo-1554469384-e58fac16e23a?w=800&q=80) Deal Analysis ### How to Determine Fair Market Rent in a Market You Don't Live In 8 min read → ](/blog/fair-market-rent/)[ ![The Questions to Ask Before You Buy in a Market You Don't Live In](https://images.unsplash.com/photo-1423666639041-f56000c27a9a?w=800&q=80) Due Diligence ### The Questions to Ask Before You Buy in a Market You Don't Live In 9 min read → ](/blog/market-call-questions/) If you like this ## Read these next Hand-picked to go deeper on real estate. [![How to Renovate a Rental You've Never Seen in Person](https://images.unsplash.com/photo-1581578731548-c64695cc6952?w=800&q=80) Real Estate ### How to Renovate a Rental You've Never Seen in Person 10 min read](/blog/renovate-out-of-state/) [![How to Determine Fair Market Rent in a Market You Don't Live In](https://images.unsplash.com/photo-1554469384-e58fac16e23a?w=800&q=80) Real Estate ### How to Determine Fair Market Rent in a Market You Don't Live In 8 min read](/blog/fair-market-rent/) [![The Questions to Ask Before You Buy in a Market You Don't Live In](https://images.unsplash.com/photo-1423666639041-f56000c27a9a?w=800&q=80) Real Estate ### The Questions to Ask Before You Buy in a Market You Don't Live In 9 min read](/blog/market-call-questions/) [![How to Invest Out of State Without Getting Burned (The One Trap)](https://images.unsplash.com/photo-1500382017468-9049fed747ef?w=800&q=80) Real Estate ### How to Invest Out of State Without Getting Burned (The One Trap) 8 min read ](/blog/invest-out-of-state/) Off to go build something. 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