Real estate is a very cutthroat business, and big success almost always goes to the investors who have the right forethought to detect profitable real estate opportunities before their competition. And in this day and age, with the help of technology and the internet, real estate investing is much easier and is accessible to almost everyone. This also means that the competition is stronger and people have the same opportunity and access to win big and buy the right real estate opportunity to make money. In real estate, money goes to those who study their markets and prospective real estate opportunities.
There is no such thing as having a successful real estate business on a whim. Luck may play a small part in making money in real estate, but success in real estate investing is majorly attributed to how you go about calculating the profitability of your potential investments in the long term.
Be rest assured that real estate investors won’t scale in growing their business using old school methods and long spreadsheets to study their real estate investments. Technology has paved better solutions to save us time and make us more efficient. This efficiency translates into bigger profits in a shorter time frame. And this applies to almost everything we do, not just real estate investing.
Related: How to Find and Buy the Best Real Estate Investment Properties?
So, if you still need more convincing why an investment property calculator is your best bet to win BIG, then keep on reading.
What Is an Investment Property Calculator in Real Estate Investing?
In the simplest terms, an investment property calculator measures the profitability and feasibility of a real estate investment strategy. Mashvisor’s investment property calculator helps cut real estate investors’ time in half when it comes to honing in on positive cash flow properties anywhere in the country. It measures the profitability of an investment property (whether traditional or Airbnb) based on your fixed and variable costs. In turn, it gives investors an accurate estimate of their expected returns including projected cash flow and overall return on investment, aka ROI. In a nutshell, an investment property calculator eliminates human error and guarantees profitable investments to grow your real estate business in the long run.
What Does Mashvisor’s Investment Property Calculator Measure?
1. Cash Flow: The investment property calculator measures a property’s projected cash flow returns on a monthly basis. Positive cash flow returns mean profitable real estate investments; otherwise, don’t bother spending your money on a property reaping negative cash flow returns, UNLESS you are into a negative gearing strategy.
2. The Capitalization Rate, aka Cap rate: Mashvisor’s rental property calculator also gives you the rate of return on investment based on your net operating income (NOI) to the property value. For example, if a real estate property is sold for $1,000,000 and had an NOI of $100,000, then the cap rate would be 10%.
3. The Cash on Cash Return (CoC Return): The CoC return measures the rate of return in terms of the cash income earned on the cash invested in a rental property. This metric only measures the total ROI based on your cash investment.
4. Return on Investment (ROI): The ROI is simply the ratio of the annual rental income over the total cash investment.
5. Net Operating Income (NOI): Mashvisor’s investment property calculator also measures the NOI based on total income and the property’s operating expenses.
Related: What is Cash on Cash Return? The Simple Guide
The Perks of an Investment Property Calculator in Real Estate Investing
1. An investment property calculator is time efficient
You can rest assured that using an investment property calculator will cut your time in half and save you the hassle of aggregating tedious spreadsheets. Not only are real estate investors saving time, but they guarantee profitable real estate investments using the rental property calculator by inputting their expenses to estimate the overall ROI.
2. An investment property calculator has more accuracy
Why take the long path when technology gives us shortcuts? With spreadsheets, making changes and amending your numbers respective to real time changes will not reap accurate estimates and help you in making smarter investment decisions. Au contraire, it will be very frustrating and ineffective for many. Mashvisor’s investment property calculator offers comparative and historical data to deduce accurate calculations for your real estate market analysis.
3. An investment property calculator is more dynamic
The real estate market is far from static, and it is crucial to update your numbers according to the changes happening real time to reap most accurate results. With this in mind, spreadsheets will not allow you to do that. Once you’ve entered your numbers and figures, they are there until you change them.
4. An investment property calculator takes into account more variables
To give a good example, Mashvisor’s investment property calculator takes into account the macro conditions in the calculation, i.e., the neighborhood and the city. The Mashmeter gives an overall neighborhood score expressed as a percentage, which allows real estate investors to compare it to other neighborhoods in the same city or across cities.
5. An investment property calculator is a prerequisite for your real estate market analysis
To diversify your real estate portfolio for maximum returns, it is crucial to have the right data at hand when it comes to the location and the rental property in question. It is impossible to collect that much data yourself, let alone analyze it properly. Successful real estate investors acknowledge the fact that having the right data is an essential step in conducting real estate market analysis. Mashvisor’s investment property calculator, for example, has an enormous data set available to you. You can use the data to compare different properties and neighborhoods all over the country.
6. An investment property calculator eliminates human error
This one needs little explaining. You don’t have to enter all the data by hand, with an investment property calculator you can enjoy a much more dynamic experience which allows you to react fast to any important changes in the real estate market.
Related: How to Find The Best Cash Flow Investments in Real Estate
Conclusion
To win big and stay ahead of your competition, use the investment property calculator to pinpoint the best real estate opportunities across the country in just a matter of minutes. Don’t waste time on making spreadsheets; instead, make smarter investment decisions to grow your business using an investment property calculator.
To learn more about how we will help you make faster and smarter real estate investment decisions, click here.