Rent roll
A unit-by-unit list of current rents, lease dates, deposits, and occupancy. Compare it to signed leases and bank deposits, and note any subsidized units and who pays which portion.
Buyer & investor guide
How to evaluate a cashflow property.
A practical framework for reading rent rolls, expenses, NOI, and cap rates, plus due diligence and offer steps for small multifamily and other rental property in California.
Educational only. This guide is not an offer, a solicitation, or investment advice, and it makes no promise of returns. Cashflow RE’s own buildings are not offered for sale through this page.
The numbers
Reading the financials
Start with rent rolls, not curb appeal. Then verify everything.
Operating expenses
Property taxes (reassessed at sale in California), insurance, utilities paid by the owner, repairs and maintenance, management, landscaping, trash, and any HOA dues. Ask for at least 12 to 24 months of actual figures.
Net operating income (NOI)
Gross income minus vacancy and operating expenses. NOI leaves out loan payments, depreciation, and income taxes.
Cap rate
NOI divided by price. It lets you compare properties on an unleveraged basis. A higher cap rate isn’t automatically better, because it often reflects more risk or deferred work.
Vacancy & credit loss
Budget for turnover and unpaid rent even if the building is full today. A reserve gives you room for re-leasing time.
Capital expenditures
Roofs, sewer laterals, water heaters, HVAC, windows, paint, and paving wear out. Estimate remaining life and set aside reserves instead of counting every dollar as cashflow.
Example
A simple NOI and cap-rate illustration
Made-up round numbers, to show the arithmetic only. They are not a projection for any property.
- Gross scheduled rent: $100,000 per year
- Less vacancy & credit loss (5%): −$5,000
- Less operating expenses: −$35,000
- Net operating income: $60,000
- At a $1,000,000 price, the cap rate is: $60,000 ÷ $1,000,000 = 6.0%
- Then: subtract debt service to see cashflow before taxes, and keep a separate capital reserve.
Rental-specific factors
What else affects a rental
Items that change risk, timing, and the work involved.
Housing Choice Voucher (Section 8) tenancies
Rent is split between the tenant and the housing authority under a contract. Plan for unit inspections (HQS/NSPIRE), rent-reasonableness reviews, and approval timing when rents change. Confirm the current contracts and payment history.
Rent caps & just-cause basics
California has a statewide rent cap and just-cause eviction law that covers many rentals, with exemptions. Some cities and counties have stricter local rules. Confirm how they apply to a specific property with qualified counsel before relying on rent increases.
Insurance
Get quotes early. Availability and pricing vary by location, wildfire exposure, roof age, and claims history, and can affect your numbers.
Leases & deposits
Read every lease and addendum: term, utilities, pets, parking, and deposits to be transferred. Estoppel letters from tenants can confirm the terms.
Utilities & meters
Who pays what, and whether units are separately metered, changes your expense picture.
Local permits
Check for unpermitted units or additions, open permits, and any local rental registration or inspection programs.
Due diligence
Due-diligence checklist
Use your contract’s contingency period to verify before you commit.
- Documents: leases, rent roll, 12–24 months of income and expenses, utility bills, tax bills, insurance history, and service contracts.
- Tenant files: deposits held, subsidy contracts, notices served, any disputes.
- Physical inspections: general home inspection, roof, sewer lateral video, pest/termite, electrical panel, plumbing, and HVAC.
- Unit walk-throughs: with proper notice to tenants, view every unit you can.
- Title & zoning: preliminary title report, easements, legal unit count, and permit history.
- Hazards & disclosures: seller disclosures, natural hazard report, and lead-based paint disclosure for pre-1978 buildings.
- Rules: rent cap / just-cause applicability, local ordinances, and voucher contract terms.
- Financing & insurance: loan approval, appraisal, and bound insurance before contingencies expire.
Making an offer
Steps to make an offer
A typical path. Your agent and your contract set the details.
- Get pre-approved or show fundsLenders underwrite rental income differently, so ask early.
- Review the packageRent roll, expenses, disclosures, and any reports the seller provides.
- Write the offerPrice, deposit, financing terms, contingency periods (inspection, appraisal, loan, records review), closing date, and requests such as estoppels.
- NegotiateCounters on price, credits, timing, or repairs.
- Open escrow & verifyDeposit to escrow, then inspections, document review, appraisal, and insurance.
- Remove contingencies or renegotiateDo it in writing before the deadlines.
- CloseSign, fund, and record. Then send tenant notices of the new owner and the payment instructions.
FAQ
Buyer & investor questions
Short answers to common questions.
Do you sell your own buildings to investors?
This guide is educational. Cashflow RE’s own buildings are shown on the site as operated assets and are not offered for sale here.
What cap rate should I target?
That depends on location, condition, risk, financing, and your goals. A cap rate is a comparison tool, not a promise of return.
Is NOI the same as cashflow?
No. NOI comes before loan payments and capital reserves. Cashflow is what remains after debt service and reserves.
Are voucher tenants a good fit?
Many owners work successfully with voucher programs. Plan for inspections and administrative timing, and verify the contract details for any unit you are buying.
Can I raise rents after I buy?
Possibly, within the lease terms, notice rules, and any statewide or local rent limits. Get legal advice for the specific property first.
How do I start a conversation?
Use the investor form, or text 510-220-1726 (preferred) / email cashflowre2@gmail.com.
Please note: This guide is general education, not legal, tax, or investment advice, and not an offer to sell or a solicitation of an offer to buy any security or property. Verify all figures and laws with your own advisors.
Prefer to talk? Text 510-220-1726 (preferred) · or call · cashflowre2@gmail.com