Three questions, one set of numbers
Most property tools answer one question. An investor calculator tells you whether the rent covers the mortgage. A rent-versus-buy calculator tells you whether owning beats renting. Neither one tells you whether either option beats simply not buying and investing the money.
That third comparison is the one that changes decisions, and it is routinely left out. The reason matters: leaving it out systematically favors buying, because the down payment is treated as though it has no alternative use. It does. A $147,000 down payment invested at a market return compounds whether or not you own a house.
What "cash flow" actually includes here
The two line items people leave out are maintenance and vacancy. A rental is not occupied 100% of the time, and a house consumes capital — roofs, HVAC, water heaters, flooring between tenants. The defaults here use 1.5% of value annually for maintenance and capital expenditure, and 13% of rent for vacancy plus management, which is a reasonable starting point for a single-family rental. Adjust both to your market and whether you self-manage.
Leaving those two out is the single most common way a property that loses money every month appears to break even on a spreadsheet.
Why cap rate and cash-on-cash disagree
Cap rate divides net operating income by purchase price and deliberately ignores financing. That makes it useful for comparing two properties in the same market on equal footing, and close to useless for judging whether a leveraged purchase is a good idea for you specifically.
Cash-on-cash divides your annual pre-tax cash flow by the actual cash you put in. It answers a different and usually more relevant question: what is this doing for the money I committed? A property can show an acceptable cap rate and a deeply negative cash-on-cash return at current rates, which is exactly the situation many single-family purchases are in right now.
The comparison nobody runs
The final section models three paths over your hold period. Buy: equity from principal paydown plus appreciation, less the money spent on interest, taxes, insurance, and maintenance, less selling costs at exit. Rent and invest: the down payment and closing costs invested at your assumed market return, plus any monthly difference between renting and owning invested alongside it. Rent only: the baseline.
Two things fall out of this that surprise people. Buying often loses over short horizons regardless of the market, because transaction costs on both ends consume several years of appreciation. And in high-rate environments the invested-difference path can win over long horizons too, because the interest you're paying is real money leaving your hands every month while the index fund compounds untouched.
None of this argues against buying a home. It argues for knowing which one you're choosing and why — the non-financial reasons for owning are legitimate, and they're easier to weigh honestly when the financial side isn't quietly overstated.
What this can't see
Rent and value estimates are automated models built from comparable properties. They don't know the kitchen was renovated last year or that the house backs onto a highway. Property tax figures come from the last assessment and can jump substantially at sale in some jurisdictions. Insurance is an estimate until you have a quote for that specific address.
Treat the pulled numbers as a fast, decent starting point, then replace them with real figures before you make a decision. The math is only as good as what goes into it.