How Our Property Analyzer Actually Works
Most real estate calculators are built to make deals look good. Ours is built to tell you the truth — including the parts that hurt.
Built for investors who’ve been burned by optimistic spreadsheets
Most online real estate calculators share the same fatal flaw: they’re designed to produce green numbers. They ignore expense inflation. They use “annualized ROI” instead of true IRR. They don’t account for depreciation recapture at exit. They let negative cash flow deals slip through with a passing grade.
We built this analyzer differently. Every input inflates over time. Every expense compounds. Every tax consequence at exit is modeled — including the 25% depreciation recapture tax that will cost you real money when you sell. And if a deal doesn’t cash flow in Year 1, it cannot receive a “Go” verdict. Full stop.
This is the same framework we use internally when evaluating investment properties for our clients. We made it available on our site because we believe informed investors make better long-term partners.
Seven metrics, one verdict
The analyzer evaluates every property across seven independent dimensions before issuing a verdict. No single metric can make or break a deal — but the combination tells a complete story.
Every number compounds. Nothing stays flat.
A long-term hold analysis is only as good as its assumptions about the future. We built in realistic inflation rates based on historical Phoenix metro data — not flat-line placeholders.
Income side
Rent compounds at your entered annual growth rate. Effective income accounts for vacancy before any percentage-based expenses are calculated — so vacancy isn’t double-counted against you.
Expense side
Property taxes inflate 2%/yr. Insurance inflates 3%/yr. HOA inflates 2%/yr. Management, CapEx, and maintenance are all calculated on vacancy-adjusted income. Carrying costs (pool, pest, landscape) inflate 2%/yr.
Debt service
Principal and interest is calculated using standard amortization. Loan balance is tracked month-by-month across the entire hold period — so equity and exit proceeds are precise at every year.
Exit modeling
Sale proceeds account for selling costs, loan payoff, depreciation recapture tax at 25%, and long-term capital gains tax on the remaining gain. If the loan balance exceeds sale proceeds, the analyzer flags it explicitly.
Three vacancy scenarios, every time
Every analysis automatically runs the deal at 0%, 5%, and 10% vacancy — side by side. You see monthly cash flow, annual cash flow, NOI, and DSCR at each scenario before you make a decision. A deal that only works at full occupancy isn’t a deal — it’s a prayer.
Two taxes at exit. Most calculators model zero.
When you sell a rental property, the IRS doesn’t just charge you one rate. There are two distinct tax events:
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Depreciation recapture (25%). Every year you own a rental property, you claim depreciation as a deduction. When you sell, the IRS recaptures that benefit — taxed at 25%, separate from everything else. On a $350,000 property held 10 years, this is roughly $25,000 in recapture tax alone.
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Long-term capital gains. The remaining appreciation above your adjusted basis is taxed at your long-term capital gains rate (we default to 20%, which you can adjust). This applies after the recapture portion is separated out.
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1031 exchange eliminates both. If you roll proceeds into a like-kind property, both taxes are deferred. The after-tax tab notes this explicitly — because for serious investors, the 1031 is the exit strategy.
The after-tax IRR shown in key metrics reflects both of these taxes. It is the most conservative — and most accurate — measure of what you actually keep.
Four outcomes. No false positives.
The verdict is scored across seven criteria. But two conditions override the score entirely — because no amount of appreciation potential should obscure a structurally broken deal.
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Strong Go — Multiple metrics align including positive cash flow, acceptable cap rate, DSCR above 1.25, and IRR above 12%. This property earns its place in a portfolio.
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Go with Eyes Open — Solid fundamentals with one or two areas to monitor. Negotiating on price or terms could push this into a stronger position.
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Proceed with Caution — Either negative cash flow OR a deal that leans heavily on appreciation. Acceptable only with strong conviction and financial reserves. Negative cash flow automatically triggers this verdict regardless of other scores.
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No-Go — Numbers don’t support a long-term hold at this price and terms. Walk or renegotiate. If the loan balance exceeds sale proceeds at your exit year, this verdict is forced.
Tested against seven real scenarios before publishing
Before this tool went live, we ran it through seven adversarial test cases — including edge cases designed to break most calculators. Here’s what we verified:
| Test scenario | What we verified | Result |
|---|---|---|
| Solid Phoenix SFR $350k · $2,200/mo · 25% down · 7% |
All metrics calculate correctly; IRR converges (7.9% pre-tax at today’s rates — honest result) | PASS |
| Negative cash flow deal $500k · $2,200/mo · 20% down · 7.5% |
Cannot score “Go” verdict; IRR converges to 2.4%; correctly identified as caution | PASS |
| Short hold, zero appreciation 5-year hold · 0% appreciation |
Negative proceeds correctly detected and flagged; No-Go verdict triggered | PASS |
| All-cash purchase 100% down · 0% interest |
DSCR shows N/A (no debt); PI = $0; IRR and CoC calculate correctly | PASS |
| Value-add with rehab $25k initial repairs |
Rehab correctly flows into total cash invested, reducing IRR and cash-on-cash | PASS |
| 0% interest rate Division-by-zero edge case |
No crash; equal principal payments calculated correctly | PASS |
| Deep negative CF stress test $600k · $2,000/mo · -$2,368/mo CF |
IRR converges to -2.7% (not NaN); NPV verified ≈ 0 at calculated rate | PASS |
What this tool doesn’t model — and why that matters
We’d rather tell you what the tool can’t do than have you rely on it for something it wasn’t designed for.
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It doesn’t model cost segregation. Accelerated depreciation through cost segregation studies can dramatically improve Year 1 tax efficiency. This requires a CPA and property-specific engineering. What the tool shows is straight-line depreciation only.
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It doesn’t model financing changes. Refinances, cash-out refi, ARM rate adjustments, or early payoff scenarios are not modeled. The tool assumes you hold the original loan to your exit date.
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Land value is estimated, not appraised. Depreciation calculations assume 20% land value and 80% improvement value — a reasonable approximation for Phoenix SFR, but your actual tax basis should be established with your CPA at purchase.
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It assumes one rent rate, not lease-specific cycles. The model compounds rent annually at your entered rate. Real rent growth happens in lease renewal increments, often with gaps. The model is a reasonable approximation, not a lease-by-lease forecast.
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It is not legal, tax, or financial advice. It’s an analytical framework. Always verify with a licensed CPA and financial advisor before making investment decisions.
Ready to run a property?
Use our analyzer to evaluate any Phoenix-area single-family investment — or bring the numbers to us and we’ll walk through them with you.
Open the analyzer