US Investor Guide
Use cap rate, cash-on-cash return, BRRRR analysis and a conservative 1031 reinvestment check when screening US rental property opportunities.
Direct answer
Use cap rate to compare operating performance before financing, cash-on-cash return to understand leveraged cash performance, BRRRR analysis to model refinance risk, and a 1031 tool only as a planning screen before professional tax advice.
Cap rate is useful before financing. Cash-on-cash return is useful after financing assumptions are added. Keeping those two views separate makes it easier to see whether a property is strong on its own or only appears attractive because of leverage.
The BRRRR strategy is highly sensitive to rehab overruns, after-repair value, seasoning or lender requirements, refinance LTV and the interest rate available when the refinance happens. Run downside scenarios instead of relying on one ARV.
A like-kind exchange is procedural and tax-specific. Replacement value and equity reinvestment screens can help prepare for a conversation, but recognized gain, basis, debt, exchange expenses and deadlines should be reviewed with a qualified intermediary and tax professional.
Put the guide into practice
