Begin with effective rental income
Start with scheduled rent, then subtract vacancy and collection loss. Add recurring income such as parking or laundry only when it is realistically collectible.
Include the expenses that arrive unevenly
Property tax, insurance, management, utilities, routine maintenance, turnover, and capital reserves all affect the result. Annualize irregular costs instead of treating quiet months as normal.
Use each metric for one job
Cap rate compares net operating income with property value before financing. Cash flow includes debt service. Cash-on-cash return compares annual pre-tax cash flow with the cash actually invested.
Test your scenario
Use the related calculators
The guide frames the comparison; the calculators let you enter your own numbers and test alternatives.