Cap rate, real cash flow, and return on the cash you put in — including the expenses most analyses leave out. Estimate only, not investment advice.
Estimates only — not investment, tax, or legal advice. How we calculate every figure
Estimated all-in monthly payment for a home price you have in mind.
What homeowners insurance costs in your state, and whether what you pay is out of line.
Income, savings, and debts in — max home price and qualification signal out.
A rental bought for $300,000 and sold seven years later for $394,780 nets $158,925 at closing — and owes about $24,753 of federal tax, $15,273 of it on depreciation you were required to take. Here is the math, why a sale with zero appreciation still owes tax, and the three clocks a fourth-quarter sale starts.
A leveraged rental makes money three ways and cash flow is only one of them. Here is what the other two are worth — and why the structure that maximises them is a bet, not a plan.
How to verify one specific rental deal: audit the seller's pro-forma line by line, comp a real rent, reassess the tax, age the systems, and price the offer the numbers actually support.
Set up basis correctly, claim the depreciation you are owed, survive the passive-loss rules, and know what the sale will cost — with every figure tied to the statute.
Rhode Island guide
Rhode Island is a coastal state with hurricane deductibles, and almost everything you would expect to follow from that turns out to be wrong.
You would expect insurance to be the expensive line. It is not. Rhode Island's average premium is $2,270 a year at $300,000 of dwelling coverage — below the national average, essentially flat year over year, and on the worked example below it is only 0.36 times the property tax bill. What actually consumes a Rhode Island rental is the 1.19% effective property tax rate applied to a $525,000 median sale price: $6,247.50 a year, the largest single operating expense in this article by a wide margin.
You would expect the hurricane deductible to be an uncapped carrier decision, the way Florida's or Alabama's largely is. It is not. Regulation 230-RICR-20-05-13 caps it at 5% of the insured dwelling value and forbids insurers from offering optional hurricane deductibles above that. Broader windstorm deductibles — the non-named-storm kind that quietly attach to ordinary weather in the Plains states — are prohibited outright in Rhode Island.
And you would not expect a state to hand you a lever to remove the deductible entirely. The same regulation requires the insurer to waive the hurricane deductible where the owner has voluntarily installed qualifying mitigation. That provision is unusual nationally, and Section 2 argues it is the most actionable single item in this entire article.
None of which makes the deductible small. At a realistic replacement cost, 2% is $9,720 and the statutory maximum is $24,300 — 61% and 152% of a year's net operating income respectively. It is tail risk rather than carrying cost, and tail risk still has to be funded.
A note before you start: this is general educational information about how rental property arithmetic works in Rhode Island. It is not investment, tax, insurance, or legal advice, and it is not a recommendation about any property. Talk to a Rhode Island CPA about tax treatment, a licensed Rhode Island agent about a real quote, and a Rhode Island attorney about anything contractual — which you will need anyway, because Rhode Island requires one.
Read the full Rhode Island guide →24 min read · Updated 2026-08-28