Detroit Rental Cash Flow: A Practical NOI Checklist

Start from rent you can prove

Use rent from signed leases on comparable nearby homes. Asking rents on listing sites are often higher than what actually leases.

Subtract a vacancy allowance

Allow for time between tenants and for non-payment. Choose an allowance appropriate to the property and the street, and show it explicitly.

List every operating expense

• Property taxes, using the actual tax bill and checking for reassessment after sale.
• Landlord insurance priced for the property's age and condition.
• Property management fees, including leasing and renewal fees.
• Routine maintenance and repairs.
• Capital reserves for roofs, furnaces, water heaters and similar replacements.
• Any landlord-paid utilities and city rental registration or inspection costs.

Calculate NOI and annual net ROI

NOI is gross rent minus vacancy minus operating expenses. Our listings define projected annual net ROI as estimated annual NOI divided by total cash invested (price plus estimated rehab and closing costs), before income tax, assuming an all-cash purchase unless stated.

Read the 8%–12% target correctly

We use 8%–12% annual net ROI as an aspirational screening target. It is not a historical average or a promise. A property's actual result can be lower or negative if any assumption changes.