Does the rental math work?

Thresholds: Cap rate ≥7% is generally good (varies by market: Bay Area normal at 4%, Cleveland 8%+); ≤5% is thin. Cash-on-cash ≥8% beats most index funds. DSCR ≥1.25 qualifies for non-QM DSCR loans, but DSCR lenders typically compute gross rent ÷ PITIA (P&I + tax + ins + HOA), not NOI ÷ P&I, so your qualifying DSCR is the PITIA number shown above, which can be higher or lower than the P&I figure. Tax model: rental income taxed at marginal; depreciation (building share of price + closing costs, plus capitalized capex, 27.5-yr straight line) creates losses that hit the §469(i) passive-loss allowance ($25k below $100k AGI, phased out by $150k; set your AGI above). Losses above the allowance suspend (no current cash benefit). Sale triggers depreciation recapture (lesser of 25% or marginal) on the §1250 unrecaptured slice plus LT cap gains (0/15/20%) on the rest; the 3.8% NIIT applies to rental profit and the whole sale gain to the extent your MAGI (AGI above plus the gain) exceeds $200k single / $250k MFJ. Property tax, maintenance and capex each year are based on the home’s value at the start of that year. IRR is computed on the cash-flow stream including initial outlay and the after-tax sale at horizon. Not modeled: 1031 exchange, QBI/§199A, suspended-loss carryforward, state taxes, BRRRR refinance.