The real ways people own rentals — each analyzed the same honest way, with ROI per square foot and a year-by-year outlook. Pick your situation:
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Property & Financing
Income & Operating (full rental)
Use a comparable rent for your specific property — check Zillow's Rent Zestimate, Rentometer, or recent local listings.
use less than 12 for a part-time / seasonal rental (e.g. a vacation rental)
The two units
Your rental portion
a single room turns over more often than a whole unit — 8–10% is realistic if refills take a few weeks
You live here and have a job — the monthly cash flow below is your net housing cost (negative is normal), and "total profit if sold" shows the equity you build.
The ADU (added unit on your lot)
Put the all-in build cost in "ADU build / cost" — including the hidden extras (utility hookups, site prep, permits, sprinklers). See the ADU footnotes below.
Projection
Remodel & resale (optional)
adds to your cash invested
higher rent the remodel justifies
your best guess of what it sells for after any remodel. Leave 0 to use purchase price + appreciation.
For a flip or value-add deal, enter the resale price you expect. The "Three ways to play it" table uses it for the Flip column.
Stress test — your bad-year settings
A one-year "what if it goes wrong" check. Set how bad each shock is; the table on the right recomputes. You decide whether they happen alone or all at once.
Your net housing cost
You pay per month to live here
—
Will it make money over time?
Year
Cash flow/mo
Total profit if sold
Standing
Ahead net positive if you sold that year · Close within ~10% of break-even · Behind net negative. "Total profit if sold" = all cash flow to date + sale proceeds (after selling cost & loan payoff) − your cash invested.
You live here, so the monthly cash flow is your housing cost (negative is normal). The "Total profit if sold" column is the honest wealth picture — it counts the equity you build while a renter helps pay the mortgage.
Year-by-year metrics
Year
Cap
CoC
Cash flow/mo
DSCR
ROI/sqft
P&I/mo
Cap = yield on your purchase price; cash flow rises over time as rent grows while your mortgage P&I stays fixed. Cap, CoC & DSCR are defined in the footnotes.
These investment ratios look low here because you also live in the property — only the rented portion counts as income while the whole place carries the costs.
Three ways to play it — what you'd make
Year
Flip sell, no rent
Rent then sell
Just rent income only
Flip = buy (+ remodel), hold without renting, sell at your resale price — net after purchase, remodel, carrying cost & selling cost. Rent then sell = rent it the whole time, then sell — cash flow to date + sale proceeds − cash invested. Just rent = keep it, never sell — only the cash flow you've collected (negative means you funded it out of pocket; you still own the equity). All three include your remodel & resale inputs.
Stress test — survives a bad year?
Scenario
Cash flow/mo
Verdict
Quick ratios
Rent / sq ft
—
monthly
Value / sq ft
—
price ÷ sqft
1% rule
—
rent ÷ price
NOI
—
net operating income / yr
Build pays for itself in
Years to recoup the ADU build from rent
—
The numbers
ADU cap rate
—
net income ÷ build cost
ADU net income
—
per year, after costs
Monthly net
—
after ADU costs
ROI / sq ft
—
net income ÷ ADU sqft
Rent / sq ft
—
monthly
Cost / sq ft
—
build ÷ ADU sqft
Recouping the build over time
Year
Net income/yr
Cumulative
% of build
Net income = ADU rent minus its vacancy, tax, insurance & maintenance. Rent & costs grow ~2%/yr. The table stops the year you've recouped the build (100%) — that's your payback year.