Are you looking to invest in real estate in 2022? Buying rental property comes with a lot of benefits, such as passive income, leverage, and tax benefits.
However, many beginner investors end up losing money because of making wrong investment decisions. So, how do you ensure that you purchase a profitable investment property? The answer is: By conducting a thorough analysis using a reliable investment property calculator.
While there are numerous real estate investment calculators available, the best rental property calculator that’s currently on the market is Mashvisor’s. Read on to learn why you need to use this real estate return on investment calculator before buying an investment property in the US real estate market in 2022.
What Is Mashvisor’s Investment Property Calculator?
Mashvisor’s investment property calculator is a digital tool that can help you find lucrative investment properties for sale in the US residential market. To attain a profitable real estate investment, you need to choose the right location, buy the right investment property, and select the optimal rental strategy. Mashvisor’s real estate investment calculator helps you achieve all of your goals.
It does so by enabling you to find and analyze both neighborhoods and investment properties. All you need to do is to enter some basic information according to your investment criteria, and the investment calculator real estate tool will do the rest of the work. The tool is quick and accurate as it uses reliable traditional and predictive analytics. It will save you a lot of time and effort in analyzing potential real estate deals.
Let’s take an in-depth look at how Mashvisor’s investment property calculator can help you conduct neighborhood analysis and investment property analysis in 2022.
1. Neighborhood Analysis
Location is the most important factor in real estate investing as it is the largest determinant of your return on investment. Therefore, you need to conduct a thorough real estate market analysis to locate the best-performing markets.
Choosing the city to invest in is quite easy as you can find city data online, such as on Mashvisor’s real estate blog. However, this is only half of your market research. You must narrow down your property search to a particular neighborhood in your city of choice. Similar income properties in different areas within the city can have very different prices and generate significantly different returns.
Mashvisor’s investment property calculator helps you find the best neighborhood for your budget and investment strategy easily and quickly. With just a few clicks of the mouse, you can conduct a complete neighborhood analysis.
One easy and efficient way to begin your neighborhood analysis is to use Mashvisor’s real estate heatmap. The heatmap tool uses different color codes to show the performance of neighborhoods in your market of choice based on several metrics, such as price, rental income (Airbnb and traditional), cash on cash return (Airbnb and traditional), and Airbnb occupancy rate.
After identifying top-performing neighborhoods that fit your budget, you can do a more in-depth analysis of the neighborhoods using Mashvisor’s investment property calculator.
The real estate investment calculator will provide the following neighborhood-level real estate data and analytics on the Neighborhood Analytics Page:
- Median price
- Average price per square foot
- Average Airbnb and traditional rental income
- Average Airbnb and traditional cash on cash return
- Average Airbnb occupancy rate
- Optimal rental strategy
- Optimal number of bedrooms
- Optimal property type
- Number of traditional and Airbnb properties for sale
- Walk score
- Mashmeter score
- Real estate comps
Mashvisor also allows you to download a full report for the neighborhood you are analyzing. The report includes all the property listings in the neighborhood, as well as their stats in an Excel format to help you compare them easily.
The real estate investment calculator Excel sheet format is an excellent way to understand the projected value of investment properties. You can share the said information with your agent or with your friends and family when making your investment decisions.
2. Investment Property Analysis
Once you’ve decided which neighborhood to invest in, the next step is to find the most profitable income property for sale you can buy. It will require that you analyze multiple property listings that fall within your budget and fit your investment goals to determine the best one for your particular case.
Since you already have a good idea about the optimal property type, number of bedrooms, and rental strategy from your neighborhood analysis, you need to focus your search on these properties.
A quick and efficient way to do your investment property search in 2022 is to use Mashvisor’s Property Finder. The tool will scour your target market and provide you with a list of properties that match your exact search criteria and have a high return on investment potential.
In addition, one of the best features that Mashvisor offers is the return on investment calculator real estate tool, which is an interactive real estate investment calculator that you can modify and customize based on your needs in the following analysis steps.
You now need to conduct a detailed analysis of these properties. This is where Mashvisor’s calculator comes in. For each property you analyze, you’ll get a variety of useful investment property information including:
Mashvisor’s investment property calculator provides investors with accurate estimates of one-time startup costs and recurring rental property expenses. Monthly expenses estimates are useful in determining the potential cash flow, while the start-up costs estimates will help you know your up-front investment.
The costs estimates include:
One-Time Startup Costs
- Closing costs
- Home inspection
- Furniture and appliances
- Home repair
- Property insurance
- Property tax
- Property management expenses
- HOA dues
- Rental income tax
The investment property calculator can also be used as a rental income calculator as it provides rental income estimates. To estimate rental income on your own, you’ll need to locate rental comps in the area, a process that is time-intensive. Mashvisor’s calculator saves you time as it provides readily calculated estimates for Airbnb and traditional rental income.
With estimates for rental income and rental expenses, you can calculate the potential cash flow. However, you don’t have to as Mashvisor’s cash flow calculator will provide you with readily calculated cash flow data. It is recommended that you only invest in positive cash flow properties, especially if you are still a beginner.
Return on Investment
The main reason real estate investors conduct a rental property analysis is to determine the profitability potential. It is mainly indicated by return on investment. The two key ROI metrics are cap rate and cash on cash return.
The calculations can be very difficult to do manually, especially when analyzing multiple rental property investments. However, with Mashvisor’s cash on cash return calculator and cap rate calculator, in 2022, you can access readily available estimates of these ROI numbers.
Our return on investment calculator also comes with an inbuilt investment property mortgage rates calculator. The tool’s interactive feature allows you to calculate your potential cash flow and cash on cash return based on the mortgage information you put in. You can enter the property price, loan amount, mortgage type, loan term, down payment, and interest rate in the investment property mortgage calculator to determine the property’s ROI.
In addition to using the mortgage calculator investment property, you can input recurring expenses related to owning the property for a more comprehensive calculation. Mashvisor’s real estate return on investment calculator provides the user with data on the average expenses that each property is expected to incur based on the market that it’s in, its historical data, and other similar properties around it.
It means that you won’t need to gather the data on your own for each property that you want to analyze. It drastically reduces the amount of time needed to analyze each property and makes it much easier for beginner investors to access and use the information.
Occupancy rate is a measure of rental demand, which will exert a huge impact on your rental income and return on investment. However, estimating occupancy rate is very hard as it depends on many factors such as the desirability of the location, property type, current market conditions, your marketing skills, etc.
Mashvisor’s investment property calculator provides accurate occupancy rate estimates for you based on the performance of real estate comps in 2022.
Optimal Rental Strategy
For each of the key metrics the rental property investment calculator provides, you’ll get values for both Airbnb and traditional rental strategies. It will help you to easily compare and decide the optimal rental strategy for this particular property.
Mashvisor is unique in that it provides data analysis for both rental strategies while most other tools will only focus on one. The feature is very helpful, given the growing popularity of short-term or Airbnb vacation rentals as a lucrative way to make a profit in the rental market.
The data that Mashvisor offers for such types of rental properties can enable beginner investors to take advantage of the high potential for profits that they offer while mitigating many of the risks associated with investing in them.
Real Estate Comps
Real estate investors need to examine recent sales of similar properties in the area (real estate comps) to determine if the purchase price is reasonable to avoid overpaying. When determining their rent estimate, investors also need to look at rates charged by comparable rental listings in the area.
Finding real estate comps is made easier with Mashvisor’s investment property calculator. It will give you a list of comps and more information about them to help you do your own comparative analysis.
The Bottom Line
To become successful in your real estate investment, you need to find the right property in the right profitable location. It requires in-depth real estate market analysis and investment property analysis. With Mashvisor’s investment property calculator, you’ll be able to pinpoint the best neighborhoods and the best investment properties for sale in the US housing market even if you are a beginner investor.
While real estate investment calculators are relatively a new addition to the real estate market, they provide invaluable data and insights that enable anyone to invest. So, if you’ve been hesitating about making an investment in real estate, Mashvisor’s tools can make your decision much easier by helping you overcome the obstacles that prevent many people from investing.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, sign up for a 7-day free trial, followed by 15% off for life.