The VA loan gives you the ability to buy investment property with zero down. The BRRRR strategy gives you a framework for scaling. House hacking gives you a way to eliminate your housing costs.
But none of that matters if you buy the wrong deal.
The difference between a property that builds your wealth and one that drains your bank account comes down to one thing — the numbers. Veterans who learn to analyze deals before they buy will build portfolios. Veterans who skip this step will learn expensive lessons.
Here’s exactly how to run the numbers on a rental property so you never buy a bad deal.
The Only Number That Matters: Cash Flow
Cash flow is the money left over after you collect rent and pay every expense. If a property brings in $2,400 a month in rent and your total monthly costs are $2,100, your cash flow is $300 per month.
Positive cash flow means the property pays for itself and puts money in your pocket. Negative cash flow means you’re paying out of pocket every month to own the property — and that’s not investing, that’s subsidizing.
Your goal on every deal is positive cash flow from day one. Appreciation is a bonus, not a strategy.
Step 1: Estimate Rental Income
Start with what the property will actually rent for, not what the seller tells you or what a listing claims.
Search Zillow, Rentometer, and Craigslist for comparable rentals in the same neighborhood. Match the number of bedrooms, bathrooms, square footage, and condition. Look at what similar units have actually rented for in the last 90 days, not just what’s listed.
If you’re looking at a multi-unit property — like a fourplex with a VA loan — estimate the rent for each individual unit. If you’re planning to house hack, subtract the unit you’ll live in from the income calculation since you won’t be collecting rent on your own unit.
Be conservative. Use the low end of the comparable range, not the high end. If you find similar units renting for $1,100 to $1,300, use $1,100 in your analysis. If the deal works at the low number, it’ll work even better in reality.
Step 2: Calculate Your Mortgage Payment
For a VA loan, this is straightforward since you’re putting zero down. You need three numbers — the purchase price, the interest rate, and the loan term.
Your interest rate depends on your credit score and current market rates. If you haven’t checked your credit recently, do that first with Credit Karma — your score directly impacts the rate you’ll get and therefore your monthly payment.
Don’t forget the VA loan funding fee. Unless you have a disability rating that exempts you, the funding fee gets rolled into your loan balance. On a first-time VA loan with zero down, that’s 2.15% of the purchase price added to your mortgage.
Use an online mortgage calculator or a simple spreadsheet. Plug in the total loan amount (purchase price plus funding fee), your estimated rate, and a 30-year term. That gives you your principal and interest payment.
Step 3: Add Up All Operating Expenses
The mortgage is just one piece. Here’s every expense you need to account for.
Property taxes — Check the county assessor’s website for the property’s current tax bill. Divide the annual amount by 12 for your monthly cost. In Arizona, property taxes are relatively low compared to other states, but they still need to be in your numbers.
Insurance — Get a quote from your insurance provider for a landlord policy. This is different from homeowner’s insurance — it covers the structure, liability, and loss of rental income. Budget $100 to $200 per month depending on the property.
Maintenance and repairs — Budget 5% to 10% of gross rental income per month. Things break. Roofs leak, water heaters die, appliances fail. If you don’t budget for this, one repair can wipe out months of cash flow.
Capital expenditures (CapEx) — This is separate from maintenance. CapEx covers big-ticket items that need replacement over time — roof, HVAC, plumbing, electrical, flooring. Budget an additional 5% to 10% of gross rental income per month. This money accumulates over time so when a $7,000 HVAC replacement hits, you have the cash.
Vacancy — No property stays rented 100% of the time. Budget 5% to 8% of gross rental income for vacancy. In a strong rental market like Phoenix, vacancy rates are lower, but always build it into your numbers.
Property management — Even if you plan to manage the property yourself, include 8% to 10% of gross rental income for property management. Why? Because eventually you’ll want to stop managing tenants and toilets, and your deal needs to still cash flow when you hand it off. If you’re scaling to multiple properties using the BRRRR strategy, you’ll need a manager sooner than you think.
Step 4: Run the Cash Flow Calculation
Now put it all together.
Monthly rental income Minus mortgage payment (principal + interest) Minus property taxes Minus insurance Minus maintenance (5–10%) Minus CapEx (5–10%) Minus vacancy (5–8%) Minus property management (8–10%) = Monthly cash flow
If the number is positive, the deal is worth a closer look. If it’s negative, the deal doesn’t work — no matter how nice the property looks or how much you think it will appreciate.
Step 5: Check Key Investment Metrics
Cash flow tells you if the deal works month to month. These metrics tell you if it’s a good investment compared to other options.
Cash-on-cash return — This is your annual cash flow divided by the total cash you invested. With a VA loan, your cash invested is just closing costs (since there’s no down payment). If you put $8,000 into closing costs and the property cash flows $3,600 per year ($300/month), your cash-on-cash return is 45%. That’s excellent.
For comparison, the stock market averages about 10% annually. A good rental property with a VA loan can significantly beat that because of leverage — you’re controlling a $400,000 asset with $8,000 out of pocket.
The 1% rule (quick filter) — The monthly rent should be at least 1% of the purchase price. A $300,000 property should rent for at least $3,000 per month. This is a rough screening tool, not a final analysis. If a property doesn’t hit the 1% rule, it can still work — but run the full numbers to confirm.
Cap rate — Net operating income (rental income minus all expenses except the mortgage) divided by the purchase price. A cap rate of 5% to 8% is typical for residential rentals. Higher is better, but don’t chase cap rate at the expense of location quality.
A Real Example
Here’s what the analysis looks like on a hypothetical fourplex in the Phoenix metro area.
Purchase price: $450,000 VA loan (zero down) + funding fee (2.15%): $459,675 loan amount Interest rate: 6.25%Monthly mortgage payment: $2,830
Rental income: 4 units at $1,200/month = $4,800/month (3 rented units if house hacking = $3,600)
Monthly expenses (using 3 rented units — house hacking scenario): Mortgage: $2,830 Property taxes: $280 Insurance: $160 Maintenance (8%): $288 CapEx (7%): $252 Vacancy (5%): $180 Property management (10%): $360
Total monthly expenses: $4,350 Monthly cash flow (house hacking): $3,600 − $4,350 = −$750
Wait — that’s negative. But here’s the key: you’re living in one of the units. Compare that −$750 to what you’d pay in rent elsewhere. If market rent for a comparable apartment is $1,400 per month, you’re saving $650 per month compared to renting — and building equity at the same time.
When you move out and rent all four units at $4,800/month, your cash flow becomes $4,800 − $4,350 = $450/month positive. That’s $5,400 per year on an $8,000 closing cost investment — a 67.5% cash-on-cash return.
That’s the power of combining a VA loan with house hacking.
Common Mistakes to Avoid
Using the seller’s numbers — Sellers present the best-case scenario. Always verify rental income with independent research and add your own expense estimates.
Ignoring vacancy and maintenance — New investors love to calculate cash flow using 100% occupancy and zero repairs. Reality will correct this quickly.
Falling in love with the property — If the numbers don’t work, the numbers don’t work. Walk away. There will be another deal.
Not factoring in the funding fee — On a subsequent VA loan use, the funding fee jumps to 3.3% with zero down. That’s $14,850 on a $450,000 property added to your loan balance. It changes your payment and your cash flow.
Skipping property management in your analysis — Even if you self-manage, include the cost. Your future self will thank you when you want to scale and step away from day-to-day management.
The Bottom Line
Running the numbers on a rental property takes 30 minutes. Buying a bad deal takes years to recover from. Every property you consider should go through this analysis before you make an offer.
Start by checking your credit score — it determines your interest rate and therefore your cash flow on every deal. Then practice running these numbers on 10 properties before you buy one. By the time you make your first offer, you’ll know a good deal when you see it.
For a full walkthrough of combining this with your VA loan benefit, read VA Loan House Hacking: How to Live for Free and Build Wealth.