Thinking about buying a rental in Mendota but not sure what the numbers look like? You are not alone. Estimating returns can feel confusing if you are juggling rents, taxes, vacancy, and financing at once. In this guide, you will learn a simple way to size up cap rate, cash flow, and cash-on-cash return using Mendota-specific data sources and practical assumptions. Let’s dive in.
What returns to measure
Understanding a few core metrics will help you compare properties with confidence.
- Gross Scheduled Rent (GSR): total rent at 100% occupancy.
- Effective Gross Income (EGI): GSR minus vacancy and credit loss, plus other income.
- Operating Expenses (OpEx): recurring costs to operate the property. Excludes mortgage payments.
- Net Operating Income (NOI): EGI minus OpEx.
- Cap Rate: NOI divided by purchase price. Shows unleveraged yield.
- Debt Service: annual mortgage payments.
- Cash Flow (Before Taxes): NOI minus debt service.
- Cash-on-Cash Return: annual cash flow divided by your cash invested.
- Debt Coverage Ratio (DCR): NOI divided by debt service. Many lenders target above 1.2.
Key formulas
Use these copyable formulas to build your pro forma:
- Annual GSR = Monthly market rent × 12 × units
- Annual EGI = Annual GSR × (1 − Vacancy Rate) + Other Income
- NOI = Annual EGI − Annual Operating Expenses
- Cap Rate (%) = (NOI ÷ Purchase Price) × 100
- Monthly Mortgage Payment (PMT) = r × Pv ÷ [1 − (1 + r)^(−n)] where r = monthly rate, Pv = loan amount, n = months
- Annual Cash Flow = NOI − Annual Debt Service
- Cash-on-Cash (%) = (Annual Cash Flow ÷ Cash Invested) × 100
Find Mendota rents and vacancy
Start with local rent comps. Pull 6 to 12 comparable rentals with the same bed and bath count, similar square footage and condition, and close proximity. Favor recently leased comps to reflect actual achieved rents, not just asking prices. If Mendota inventory is thin, you can broaden to nearby Fresno County communities, and note any trade-offs that could affect rent.
For baseline rent and vacancy context, use official sources:
- Review place-level rental data in the American Community Survey for a local snapshot of renter households and median rents. See the U.S. Census Bureau’s overview of the ACS to locate the right tables.
- For a regional rent benchmark, check the U.S. Department of Housing and Urban Development’s Fair Market Rents. These help frame multifamily and voucher-aligned rents.
- To understand seasonality and employment patterns that can influence vacancy in an agricultural market, review Fresno County labor trends through the California Employment Development Department and the Bureau of Labor Statistics. Harvest and processing cycles can impact leasing timelines.
Use these inputs to set a workable vacancy assumption. A practical range for Mendota single-family rentals is 3% to 8% per year. If local managers report seasonal turnover, model at the higher end.
Estimate expenses with local data
Ground your operating expense estimates in parcel-specific and provider quotes whenever possible.
- Property taxes: In California, an effective property tax burden often approximates about 1% of assessed value plus any local assessments. Verify the actual parcel tax bill and any supplemental assessments after a purchase through the Fresno County Assessor and Treasurer-Tax Collector. Use the current bill for underwriting.
- Insurance: For Mendota, budget roughly 0.25% to 0.6% of property value per year depending on coverage and risk. Get written quotes from local insurers to confirm.
- Property management: Full-service management for single-family rentals commonly runs 8% to 12% of collected rent, with a leasing fee of 50% to 100% of one month’s rent. Ask providers for all fees in writing.
- Maintenance and repairs: Set 5% to 12% of gross rent, or use $500 to $1,500 per year for a typical single-family rental depending on age and condition. Consider a separate capital reserve.
- Capital expenditures reserve: 3% to 8% of gross rent for major items such as roof, HVAC, and appliances.
- Utilities: Confirm whether tenants or owner pay water, sewer, and trash through the City of Mendota and get electric and gas rate info from PG&E. If the owner pays, include them in OpEx using actual bills or averages.
- HOA dues, legal, leasing, and accounting: Include actual dues and budget a small annual amount for legal or bookkeeping.
Helpful local links:
Build your pro forma
Follow this straightforward sequence to evaluate a property.
- Estimate rent and vacancy
- Set monthly market rent per unit and estimate other income. Multiply by 12 for annual GSR.
- Apply a vacancy and credit loss percentage to get EGI.
- Add operating expenses
- Sum annual taxes, insurance, owner-paid utilities, management, maintenance, capital reserve, HOA, and misc. That total is OpEx.
- Compute NOI and cap rate
- NOI = EGI − OpEx. Cap Rate = NOI ÷ Purchase Price.
- Layer in financing for cash flow
- Calculate the monthly payment using the PMT formula with your rate, term, and loan amount. Multiply by 12 for annual debt service.
- Annual Cash Flow = NOI − Annual Debt Service.
- Cash-on-Cash = Annual Cash Flow ÷ Cash Invested.
Hypothetical example
Illustrative numbers only, for calculation flow:
- Purchase price: $150,000
- Monthly rent: $1,200 → Annual GSR = $14,400
- Vacancy rate: 6% → Annual EGI = $14,400 × 0.94 = $13,536
- Annual OpEx (sum): $5,136 → NOI = $13,536 − $5,136 = $8,400
- Cap Rate = $8,400 ÷ $150,000 = 5.6%
- Loan: 80% LTV at 6% fixed, 30 years → monthly payment ≈ $719 using PMT → Annual Debt Service ≈ $8,628
- Annual Cash Flow ≈ $8,400 − $8,628 = −$228
- Cash Invested ≈ $34,000 (down payment + closing) → Cash-on-Cash ≈ −0.7%
What this shows: a mid-single-digit cap rate can still produce negative cash flow at certain rates and down payments. Always test multiple financing scenarios.
Seasonality and risk checks
Mendota’s agricultural cycles can influence leasing speed and turnover. Confirm with 2 to 3 local property managers if your property type tends to lease faster in certain months. If so, underwrite at the higher end of the vacancy range or model longer days vacant in the off-season.
Two quick stress tests help you manage risk:
- Break-even test: Increase vacancy and expenses by a few percentage points and see when cash flow turns negative.
- DCR test: Target a Debt Coverage Ratio above 1.2 for comfort with most lenders.
Questions to ask property managers
Before you finalize vacancy and OpEx assumptions, request written proposals and sample P&Ls. Ask:
- What is your monthly management fee and what is included?
- What is your leasing fee? Do you charge renewal fees?
- What are typical days on market for this unit type in Mendota?
- How do you screen tenants and what is the typical approval rate?
- Do you handle maintenance in-house or via vendors, and what are markups?
- Can you share a sample annual P&L for a similar property?
- What is your eviction process, average cost, and timeline in Fresno County courts?
- Do you offer any vacancy or placement guarantees? Can you provide 2 to 3 local references?
Worksheet fields to collect
Build a simple worksheet or spreadsheet with these inputs:
- Property address and unit count
- Purchase price or market value
- Expected monthly market rent by unit
- Other monthly income (parking, laundry, pet fees)
- Vacancy rate assumption
- Annual property tax from the tax bill
- Annual insurance quote
- Monthly owner-paid utilities
- Annual management fee and leasing fee
- Maintenance and repairs estimate
- Capital expenditures reserve
- HOA dues
- Miscellaneous legal and accounting
- Loan details: loan amount, interest rate, term, points and closing costs
- Cash invested: down payment, closing costs, initial repairs
Then apply this logic:
- Annual GSR = monthly rent × 12 × units
- Annual Other Income = monthly other income × 12
- Annual EGI = (GSR + Other Income) × (1 − Vacancy Rate)
- Annual OpEx = taxes + insurance + utilities + management + maintenance + CapEx + HOA + misc
- NOI = EGI − OpEx
- Cap Rate = NOI ÷ Purchase Price
- Annual Debt Service = PMT(interest/12, term×12, loan amount) × 12
- Annual Cash Flow = NOI − Annual Debt Service
- Cash-on-Cash = Annual Cash Flow ÷ Cash Invested
When to widen your comp area
If you cannot find enough recent Mendota leases, expand to nearby Fresno County towns with similar unit types. Document any differences that could affect rent, such as commute access or neighborhood amenities. Adjust your rent estimate accordingly and keep your vacancy assumption conservative.
Your next step
If you are sizing up a Mendota rental, put together your rent comps, tax bill, insurance quote, and a draft pro forma. If you want a second set of eyes or need help sourcing comps and local contacts, reach out to our team at Boyd Realtors. We combine local experience with practical underwriting support so you can invest with confidence.
FAQs
How do I estimate cap rate for a Mendota rental?
- Divide your projected NOI by the purchase price. Build NOI from local rent comps, a realistic vacancy rate, and verified operating costs pulled from Fresno County tax records, insurance quotes, and utility providers.
What vacancy rate should I use for Mendota single-family rentals?
- A 3% to 8% annual range is a practical starting point, with the higher end used if managers report seasonal turnover tied to agricultural cycles or if the property needs rehab.
How do I factor Fresno County property taxes into the pro forma?
- Pull the current parcel bill and any supplemental assessments from the Fresno County Assessor and Treasurer-Tax Collector, then plug the exact annual total into OpEx instead of using a generic percentage.
Where can I find reliable Mendota rent comps?
- Combine recent leased comps from local channels with baseline context from the American Community Survey and HUD Fair Market Rents, and confirm current asking levels with active local advertising.
Which financing terms impact cash flow the most?
- Interest rate, down payment, and loan term drive debt service. Test several scenarios to see how cash flow and Debt Coverage Ratio change before you write an offer.
