Rental Analysis (ARR)

ARR stands for After Repair Rent -- the estimated monthly rental income a property will generate once all renovations are complete and it is tenant-ready. While ARV tells you what a property is worth if sold, ARR tells you what it earns if held. For wholesalers, ARR is the number that determines whether buy-and-hold investors will be interested in your deal, and it is just as important as ARV when you are marketing to landlords and portfolio builders.

How rental comps are found

Deal Run uses the same MLS-first search approach for rental comps that it uses for sales comps. When you navigate to the rental analysis tab on your deal analysis page, the system queries MLS rental listings near your subject property.

The MLS search for rentals returns active rental listings, recently leased properties, and pending rentals. This data includes the asking or leased rent, property details (beds, baths, sqft, year built), listing photos, and days on market. If the MLS rental data is insufficient, Deal Run falls back to property data to estimate rents based on comparable properties in the area.

Rental comps are displayed on the same map and grid interface used for sales comps, with the same color-coded markers. Green markers indicate leased rentals (confirmed rents), blue markers indicate active rental listings (asking rents), and yellow markers indicate pending rentals.

Rental comp filters

The rental comp filters work identically to the sales comp filters, with the same controls available in the toolbar.

• Radius: 0.25 to 2 miles, default 0.5 miles. Rental markets tend to be more localized than sales markets because tenants are price-sensitive and compare units within a tighter area.
• Date range: 3, 6, or 12 months, default 12 months. Rental markets can shift quickly, especially in areas with new apartment construction. Limiting to 6 months gives you the most current rental rates.
• Property type: Matched to subject. Single-family rentals command different rents than townhouse or condo rentals in the same area, even at the same bed/bath count, because tenants value the yard, privacy, and lack of shared walls.
• Beds/baths: Matched to subject by default. You can expand to include plus or minus one bedroom if exact matches are scarce. Rental adjustments per bedroom are typically $100 to $250/month depending on the market.

The same map boundary drawing tool is available for rental comps. This is particularly useful in rental analysis because rental rates can vary significantly within short distances based on school zones, proximity to employment centers, and neighborhood quality.

The ARR number

The recommended ARR is displayed at the top of the rental analysis page. It represents the estimated monthly rent your subject property would achieve in its post-renovation condition, based on the weighted average of comparable rental properties adjusted for differences in size, configuration, and condition.

For example, if your subject is a 3-bedroom, 2-bathroom, 1,400 sqft home in a Katy subdivision, and the five closest rental comps are leased at $1,650, $1,700, $1,725, $1,680, and $1,750 per month, the weighted ARR might be approximately $1,700/month after adjustments for size and condition differences.

Cash flow calculation

The core metric for rental investors is monthly cash flow: how much money the property puts in their pocket each month after all expenses. Deal Run calculates this as follows:

Monthly Cash Flow = Gross Rent - PITI - Vacancy - Maintenance - Property Management

Here is what each component means and how Deal Run calculates it.

Gross rent (ARR)

The monthly rental income before any deductions. This is the ARR number from your rental comp analysis. Using the example above: $1,700/month.

PITI (Principal, Interest, Taxes, Insurance)

This is the monthly mortgage payment plus property taxes and insurance. Deal Run calculates PITI based on:

• Principal and Interest: Assuming a conventional investment property loan with 25% down payment at the current market interest rate (Deal Run uses a default you can adjust). On a $128,000 purchase price, the loan amount is $96,000. At 7.5% over 30 years, the monthly P&I payment is approximately $671.
• Property Taxes: Pulled from the property detail data. In Texas, where property taxes run 2-3% of assessed value, a home assessed at $200,000 has an annual tax bill of approximately $5,000, or $417/month.
• Insurance: Estimated at $100 to $200/month for a landlord policy on a single-family home. Deal Run defaults to $150/month, and you can adjust this based on your actual insurance quote.

Total PITI in this example: $671 + $417 + $150 = $1,238/month.

Vacancy allowance (8%)

A monthly reserve for periods when the property is vacant between tenants. At 8% of gross rent, this is $1,700 x 0.08 = $136/month. This accounts for approximately one month of vacancy per year, which is realistic for well-maintained single-family rentals in markets with healthy demand. You can adjust this percentage if you know the local vacancy rate is significantly higher or lower.

Maintenance reserve (5%)

A monthly reserve for ongoing repairs, appliance replacement, and property upkeep. At 5% of gross rent: $1,700 x 0.05 = $85/month. This is conservative for a newly renovated property. Older properties or those with aging mechanical systems should use 8-10%. Over time, this reserve accumulates to cover larger expenses like water heater replacement ($1,000), HVAC repair ($500-$2,000), or appliance failures.

Property management (10%)

The fee for hiring a property management company to handle tenant placement, rent collection, maintenance coordination, lease enforcement, and accounting. At 10% of gross rent: $1,700 x 0.10 = $170/month. Most property managers charge 8-12% for single-family homes. Even if the investor plans to self-manage, including this cost shows the true passive return of the investment.

Monthly cash flow result

In this example, the property generates $71/month in positive cash flow, or $852/year. This is a thin but positive return. Many rental investors target $200 or more per month in cash flow. Whether this deal works for a rental buyer depends on their criteria and how they weight cash flow against equity buildup and appreciation.

Cap rate calculation

Cap rate (capitalization rate) measures the property's return independent of financing. It answers the question: if you paid all cash for this property, what would your annual return be?

Cap Rate = Net Operating Income (NOI) / Total Investment

NOI is annual gross rent minus operating expenses (vacancy, maintenance, management, taxes, insurance) but excluding mortgage principal and interest because cap rate measures the property's performance, not the financing structure.

• Annual gross rent: $1,700 x 12 = $20,400
• Vacancy (8%): -$1,632
• Maintenance (5%): -$1,020
• Management (10%): -$2,040
• Taxes: -$5,000
• Insurance: -$1,800
• NOI: $8,908

Total investment = purchase price + repairs + closing costs = $128,000 + $40,000 + $2,560 = $170,560.

Cap Rate = $8,908 / $170,560 = 5.2%.

In most markets, cap rates between 5% and 8% are considered healthy for single-family rentals. Below 5% is thin (typical in high-appreciation markets like Austin or Phoenix). Above 8% indicates strong cash flow (common in Midwest and Southeast markets). Deal Run displays the cap rate prominently on the rental analysis page so buyers can quickly assess the deal against their investment criteria.

Cash-on-cash return

Cash-on-cash return measures the annual return on the actual cash the investor puts into the deal, accounting for leverage. This is the metric most relevant to financed buyers because it shows how hard their down payment is working.

Cash-on-Cash Return = Annual Cash Flow / Total Cash Invested

• Annual cash flow: $71 x 12 = $852
• Total cash invested: down payment ($32,000) + repairs ($40,000) + closing costs ($2,560) = $74,560
• Cash-on-cash return: $852 / $74,560 = 1.1%

At 1.1%, this particular deal is not attractive from a pure cash flow perspective for a financed buyer. Most buy-and-hold investors target 8% or higher cash-on-cash returns. However, the deal may still work for a cash buyer (eliminating the mortgage payment) or for an investor who prioritizes equity buildup and appreciation over monthly cash flow.

Deal Run shows the cash-on-cash return for both cash and financed scenarios, so you can identify which buyer profile this deal suits best.

Why rental analysis matters for wholesalers

Not every buyer in your network is a flipper. Many of the most active, repeat buyers in wholesale markets are landlords building rental portfolios. If you only present flip numbers on your deals, you are missing an entire buyer segment.

Including ARR and cash flow analysis in your marketing packages expands your buyer pool. A deal that is marginally attractive as a flip (thin profit margin after holding costs) might be highly attractive as a rental (strong cash flow, good school zone, low maintenance). By running both analyses on every deal, you can target your marketing to the right buyer type and present numbers that match their investment criteria.