How to Analyze a Peoria Rental Property for Cash Flow (A Step-by-Step Guide)
Are you looking at investment properties in Peoria but aren't sure if the numbers actually work? At BTS Properties, we believe that while real estate can get complicated, analyzing a deal shouldn’t be.
In my recent video, I walked through a random Zillow listing in Peoria to show you exactly how I run the numbers. Here is the breakdown of how to determine if a property is a "buy" or a "pass" if you are looking for cash flow.
1. Start with the Big Picture: The Purchase Price
For this example, we looked at a property listed at $114,900. Your purchase price is the foundation of your analysis because it dictates two massive variables:
Your Debt Payment: Your monthly mortgage is tied directly to what you pay.
Property Taxes: A common "gotcha" for new investors is assuming the tax bill will continue to stay the same after purchase. In Peoria County, the sale price typically becomes the new fair market value used to reassess taxes in future years.
Pro Tip: To be conservative in Peoria County, I estimate future annual taxes by dividing the purchase price by 30.
2. Estimating Your Income
Before calling a property manager, do your own "sanity check" on rent.
Tool Recommendation: Rentometer is a great starting point. It isn't 100% perfect, but it usually can get you in the right ballpark.
The Nuance: Look at the "comps" (comparable rentals). Does the house have a fenced yard? A garage? Those amenities can push your rent toward the higher end of the average.
Our Estimate: For a 3-bed, 1-bath on Indiana Ave, we estimated a conservative $1,200/month.
3. The "Hidden" Expenses
This is where most investors get into trouble. You have to account for all of the money that leaves your pocket other than just what you pay the mortgage.
Vacancy (6%): Even with great tenants, houses sit empty occasionally during turnovers.
Repairs & Maintenance (10%): Your roof, furnace, and water heater won't last forever. Setting aside $100–$120 a month ensures you aren't hit with a crisis later.
Property Management (8-12%): Even if you manage it yourself now, account for this fee so your investment remains "passive" in the future.
Peoria-Specific Fees: Don’t forget the City of Peoria registration fee ($75/year for single-family) and the quarterly stormwater fee (usually $10–$20/month).
4. Calculating the Bottom Line (NOI & Cash Flow)
Once you subtract your operating expenses from your rent, you get your Net Operating Income (NOI).
Finally, subtract your Debt Payment. In our example, using a 20% down payment and a 6.2% interest rate, the mortgage came to roughly $563/month.
The Result? With a $114,900 purchase price, this specific property showed a negative cash flow of -$140 per month.
The Verdict: Buy or Pass?
For me? This is an immediate pass. If a property doesn't cash flow, I move on. However, this analysis can help you find exactly what you should pay. To make this deal break even, the purchase price would likely need to drop closer to $90,000.
Need Help Analyzing a Deal?
Running the numbers is the most important skill you can have as an investor. If you’re looking at a property in the Peoria area and want a professional second pair of eyes on the numbers—or if you need a property manager who treats your investment like their own—reach out to us at BTS Properties.
