The Numbers to Run Before Buying a Rental Property

A few years ago, you could get away with a gut check. Rents were climbing fast, home prices felt manageable next to where they’d end up, and a “pretty good” property usually turned into a decent investment anyway. That margin for error is gone. Home prices are sitting near record highs, mortgage rates are still parked in the mid 6% range, and the days of assuming a property will simply work themselves out are over. If you’re buying a home with the intention of renting it out, whether that’s a long-term lease or a short-term Airbnb, you need to run real numbers before you make an offer, not after you’ve closed. We asked Chen Zhao, Redfin‘s Head of Economics Research, what buyers get wrong when they evaluate a potential rental property today. Her answers, along with the actual metrics you should calculate before you buy, are below. Key Takeaways Home prices and mortgage rates have both stayed elevated in 2026, which means rental income has to work harder to justify a purchase than it did a few years ago. Cash flow, cap rate, and cash on cash return are the three numbers that tell you whether a property actually pencils out, not just whether it feels like a good deal. Rental demand si...