Rental Property Analysis

What does margin of safety mean?

Margin of safety is how well a deal holds up when something goes wrong.

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Answer

Margin of safety is how well a deal holds up when something goes wrong.

Example: Deal A cash flows $225/month and becomes negative if rent falls by 8%. Deal B cash flows $375/month and still makes $180/month after the same rent drop.

Deal B has the stronger margin of safety.

Related questions

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DealPrism helps you connect the concept to live property assumptions, scenario changes, and calculated outputs.

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DealPrism provides educational analysis based on available data and user assumptions. Results are estimates and may change if rent, taxes, insurance, financing, or other inputs are updated. This content is not financial, legal, tax, or investment advice.