Work the numbers before the property: market rent less vacancy, taxes, insurance, HOA dues, maintenance and management gives net operating income, that over the price gives the cap rate, and only once those hold up do you look at financing, which for an investment property commonly means 15 to 25 percent down at a rate above the owner-occupied one.
A rental is bought on arithmetic a primary residence is not. The house you live in is judged on whether you want to live in it. A rental is judged on whether the rent covers the cost of holding it with enough left to survive an empty month and a failed air-conditioner in July. Do the arithmetic on a spreadsheet before you do it on a property.
This is general information rather than tax or investment advice, and the Nevada figures are named as Nevada.
The four numbers, in order
The mortgage is deliberately not on that list. The cap rate measures the property; leverage measures your deal. Keep them apart, or a cheap loan makes a weak property look fine.
- Gross scheduled rent: what the unit actually rents for, taken from comparable units that leased recently, not from asking prices that have been sitting.
- Vacancy: subtract a share of the year, commonly 5 to 8 percent, which is roughly three to four weeks.
- Operating expenses: property taxes, insurance, HOA dues, maintenance and turnover, management if you use it, and any utilities you carry. Commonly 35 to 45 percent of gross rent on a single-family rental, before the mortgage.
- Net operating income and cap rate: rent less vacancy less operating expenses, divided by the purchase price. Cap rates are a range that moves with the market and the property type, so the only honest use of one is against other properties in the same market on the same day.
The 1 percent rule is a screen, not a rule
The old shorthand says monthly rent should be about 1 percent of the price, so $2,500 a month on a $250,000 house. At 2026 prices almost nothing in a metro market clears it, and a screen that rejects everything is telling you about the market rather than about the property. Use it for what it is good at: sorting a long list quickly, and flagging the listing that clears it easily, which usually means either a genuinely strong rent or a problem the listing has not mentioned.
What it ignores is expenses. A condo at 1 percent with $400 a month of HOA dues is a worse property than a house at 0.7 percent with none, and no rule of thumb will tell you that. The four numbers above will.
Financing is different, and so is the tax bill
Expect an investment-property loan to want more down, commonly 15 to 25 percent, to carry a rate above the owner-occupied one, and to require reserves in the bank after closing. Lenders may count a share of the market rent, often around 75 percent, toward your qualifying income, and some will underwrite the property's own cash flow instead of your income in exchange for a higher rate and a larger down payment.
In Nevada the property tax abatement that caps the annual increase at 3 percent is for an owner-occupied primary residence. Other property, a rental included, sits under the higher cap, commonly stated as 8 percent. The classification follows the use and the claim is filed with the county assessor, so a house that was somebody's home last year can be billed differently once it is your rental. Confirm the current cap and the filing with the Clark County Assessor before you build either into the model.
What to check before you write the offer
Pull the county record: assessed value, the tax as billed rather than as estimated in a listing, the sale history and the legal description. Read the HOA's governing documents for a rental cap, a minimum lease term, a waiting period after purchase, and any fee to register a tenant, because valley associations restrict all four. If the property is tenanted, ask for the current lease and the deposit ledger, since you take the tenancy with the property and Nevada requires the new owner to tell the tenant within 30 days who they are, that the lease continues, and how much deposit is held (NRS 118A.244).
Then walk the items that cost real money in this valley: the roof, the air-conditioning and its age, the water heater and the irrigation. A 15-year-old condenser in Las Vegas is a scheduled expense rather than a risk.
Questions people ask
What is a good cap rate for a rental property?
There is no universal figure, because the number moves with interest rates, the market and the property type. The use is comparative: measure several properties the same way on the same day in the same market, and the spread between them is what tells you something.
Can you buy a rental property with 5 percent down?
Not usually as a declared investment property, because the low-down-payment programs are for owner occupants. That is why house hacking is the common route to a first rental: buy a duplex or a house with a casita, live in one part, and rent the other.
How much should you budget for repairs?
A common planning figure is about 1 percent of the property value a year, or one month's rent, whichever is larger, kept separately from the roof and air-conditioning reserve. Those two are the big-ticket items, and in this climate the air-conditioner is the one with a schedule.