A transparent rental-property example showing how to calculate net operating income, cap rate, and cash flow without leaving out the expenses that change the deal.
Why a low price isn't enough
A low purchase price doesn't automatically make a San Bernardino property a good rental. The real question is what's left after normal operating expenses and the mortgage.
The numbers below are an example for learning purposes only — not a real listing, rent guarantee, loan quote, or projection. Swap in numbers for the specific address before making an offer.
The example property
Assume:
- Purchase price: $425,000
- Monthly rent: $2,400
- Annual gross rent: $28,800
- Vacancy allowance (5%): $1,440
- Property taxes: $5,100
- Insurance: $1,800
- Repairs and long-term reserves: $2,880
- Property management (8% of collected rent): about $2,189
- Other operating costs: $600
That leaves net operating income (NOI) of about $14,791 per year, before mortgage payments and income taxes.
How to calculate cap rate
Cap rate = annual NOI ÷ purchase price.
$14,791 ÷ $425,000 ≈ 3.5%.
Cap rate is a quick way to compare properties without financing. It doesn't tell you your cash-on-cash return, because it ignores your loan and how much cash you put in.
Cash flow is a separate calculation
Next, subtract your yearly principal-and-interest payments from NOI. If the mortgage cost $25,200 per year, this example would lose money each month before taxes. A bigger down payment can improve monthly cash flow, but it also ties up more of your cash.
That's why "the rent covers the mortgage" isn't enough. Taxes, insurance, vacancy, repairs, management, owner-paid utilities, HOA dues, and special assessments can all change the answer.
Use real, current rent numbers
RentCafe reported San Bernardino apartment rents averaging $1,894 in October 2026, but that average mixes sizes, property types, and neighborhoods. A house or duplex should be judged against truly similar rentals nearby, not a citywide average. See the San Bernardino rent data, then check comparable units near the address.
Questions to answer before you make an offer
- What have similar units nearby actually rented for?
- Who pays water, trash, landscaping, and utilities?
- What does the property's actual tax bill show?
- Are there repairs being put off or unpermitted additions?
- What happens if rent comes in 8% lower, or a major system fails?
Want a second set of eyes on a deal?
Send me a San Bernardino address and your financing details through the contact page, and I'll help you run a conservative first-pass analysis. You can also browse current Inland Empire listings.
Common questions
What is cap rate on a rental property?
Cap rate is annual net operating income divided by the property price or value. It excludes mortgage payments and helps compare properties before financing.
Should mortgage payments be included in cap rate?
No. Debt service belongs in cash-flow and cash-on-cash calculations, not net operating income or cap rate.
What expenses should a San Bernardino rental analysis include?
Include taxes, insurance, vacancy, repairs, long-term capital items, management, owner-paid utilities, HOA dues and any special assessments that apply to the address.