5 Numbers You Must Know Before Buying Any Rental Property in 2026

The Pro Forma Lie

Every property comes with a pro forma from the seller's agent. It will show a healthy cap rate, conservative expenses, and a clear path to cash flow.

Almost all of them are fiction.

The five numbers below are the ones that actually determine whether a property makes you money. Most investors check the first two. The ones who consistently win check all five.

Number 1: True Operating Costs

Not the seller's pro forma. Not last year's actuals. The forward-looking, fully-loaded cost of running the property in today's environment.

Three line items that almost always get understated:

• Insurance. Premiums up 8%+ nationally and 20–50% in disaster zones. If the seller is showing you a $1,800 insurance line on a Florida coastal property, run.
• Property taxes. Many counties are still reassessing pandemic-era valuation gains into current tax bills. The seller's tax line is what they pay. Yours, post-reassessment, may be 30–60% higher.
• Maintenance. Real-world maintenance runs 1–2% of property value annually, not the 5% of rent that pro formas like to use. On a $500K property, that's $5,000–10,000/year, not $1,500.

Example: a property advertised at a 7.5% cap rate, modeled with $1,800 insurance and the seller's current tax bill. Re-underwrite with realistic insurance ($4,500), reassessed taxes (+$3,000), and proper maintenance reserves (+$3,000). The actual cap rate drops to 5.6%. That's a different deal.

Number 2: Revenue Per Available Night (RevPAN), Not Gross Revenue

This is the number STR operators get wrong most often.

Gross revenue is a vanity metric. A property at $400/night with 40% occupancy generates the same gross revenue as a property at $250/night with 64% occupancy — but the second property is dramatically more profitable. Lower turnover costs, less wear, fewer cleaning fees, more predictable cash flow.

RevPAN — revenue per available night, including unbooked nights — is the only honest measure of how a property is performing.

In 2026's compressed market, occupancy matters more than nightly rate. Stop optimizing for ADR. Start optimizing for RevPAN.

Number 3: The 50% Premium Test

Take the property's current insurance premium. Multiply by 1.5. Plug that number into your cash flow.

Does the property still cash flow?

If yes, you have a margin of safety against the single biggest cost increase in the market today. If no, you are buying a property whose financial viability depends on insurance behaving — and insurance is not behaving.

This is not a hypothetical. Premium increases of 50%+ over a 24-month window are routine in coastal Florida, wildfire-exposed California, and tornado alley. Underwrite for the world that's coming, not the world the seller's pro forma assumes.

Number 4: Local Supply Pipeline

Public building permit data is the most underused source of intelligence in real estate.

Every new multifamily permit issued today is a unit that will compete with yours in 18 months. If a county has issued permits equivalent to 8% of its existing inventory in the last year, your future revenue is already being diluted — you just haven't felt it yet.

The ratio that matters is permits-to-existing-inventory:

• Under 2%: stable supply environment, minimal future dilution.
• 2–4%: healthy growth, manageable for differentiated operators.
• 4–6%: caution, especially in already-saturated submarkets.
• 6%+: material future supply pressure. Underwrite conservatively or walk.

Census Bureau permit data is free and updated monthly. The information is sitting there. Almost nobody looks at it.

Number 5: Regulation Trajectory

The single fastest way to destroy a rental property's value is a regulatory change you didn't see coming.

A city council voting to cap non-owner-occupied STR permits doesn't slowly soften your revenue — it ends it on the date the ordinance takes effect.

Before you buy, you need to know:

• Is STR regulation currently on the local council's agenda?
• Is the city in the regulatory contagion window — within 50 miles of another city that recently passed restrictions?
• Are there active resident or hotelier groups lobbying for tighter rules?
• Is housing affordability a major political issue locally? (If yes, STRs are a target.)

If any of these answers are yes, model your downside assuming the regulation passes within 24 months. If the deal still works, great. If it only works because you assumed the regulation never comes, you're gambling.

The Bottom Line

The investors quietly making money in 2026 aren't smarter than everyone else. They're just looking at the same five numbers, every single deal, before the offer goes out.

Rova calculates all 5 numbers automatically for any US address. Try the Analyzer →