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.
Washington guide
Washington has no state income tax, and that is the headline most out-of-state investors arrive with. The insurance is cheap too — $1,633 a year at $300,000 of dwelling coverage, below the national average — and there is no catastrophe deductible convention, so a wildfire claim clears the same $1,000 deductible as a burst pipe.
Two things take a good deal of that back, and neither shows up in a monthly payment estimate.
The first is property tax. At 0.84% on the $617,990 statewide median, the bill is $5,191.12 a year — 3.18 times the insurance premium and 39.79% of every operating dollar the property spends. Washington is a tax-dominated state, not an insurance-dominated one, and its arithmetic looks much more like Oregon's than like Colorado's.
The second is the real estate excise tax, and it is the one nobody models. Washington charges 1.10% of the selling price on the portion up to $750,000, 1.28% from there to $1,525,000, and more above that, with a local REET of typically 0.25% to 0.50% added on top in most jurisdictions. On the median house that is $6,797.89 to $9,887.84. Custom puts it on the seller — which means it is not on your closing statement as a buyer, and it is on your closing statement when you sell. It is an exit cost equal to roughly 40% to 59% of a full year's net operating income.
If you take one thing from this article: in Washington, model the exit, not just the entry. A property held for appreciation in a state with a 1.1%-plus excise tax on the way out needs more appreciation than the same property in Oregon or Arizona, where the transfer tax is zero.
A note before you start: this is general educational information about how rental property arithmetic works in Washington. It is not investment, tax, insurance, or legal advice, and it is not a recommendation about any property. Washington's effective property tax rate varies widely by county and levy district, and Washington has residential tenancy rules that are not covered here and must not be taken from an article. Talk to a Washington CPA about tax treatment, a licensed Washington insurance agent about a real quote, and a Washington real estate attorney about anything contractual.
Read the full Washington guide →19 min read · Updated 2026-08-28