If you want to get into real estate, you’ll need to do some research. It doesn’t matter how much experience a real estate investor has under his/her belt, everyone needs to do some sort of research and analysis to invest in rental properties.
One of the most important areas of research in real estate is at the most basic level: an investment property. What is the best tool to analyze an investment property? The answer is the topic of this blog: an investment property calculator!
Related: How Can You Use a Rental Property Calculator to Buy the Best Investment Properties?
Using an investment property calculator is the ultimate source of understanding the potential of a rental property. As great as this spectacular calculator is, there are a few cons that can come along using it. It is undoubtable, however, that the rewards of using a rental property calculator outweigh the risks. Here are the pros and cons of using an investment property calculator.
Pros of Using an Investment Property Calculator #1: Gives You the Right Numbers
There are a lot of numbers associated with income properties. Some data, like projected rental income and property price, will heavily influence the decision to purchase a certain investment property. These numbers, and many more, are obtainable by using an investment property calculator.
There are three numbers that are most important to understand an investment property’s potential. These metrics are cash flow, cap rate, and cash on cash return. Cash flow tells you how much you have earned by taking the difference of a month’s rental income and its expenses. Cap rate tells you how much of a return on investment your rental property is generating, regardless of how it is financed. A slight tweak in the cap rate formula gives us the equally important cash on cash return. It tells a real estate investor how much of a return on investment is made based on the amount of cash put into the investment property.
Without these metrics, you can’t really know how your real estate investment is performing. So, how do you get these metrics? With an investment property calculator, of course!
Cons of Using an Investment Property Calculator #1: Can Be Costly
An investment property calculator provides real estate investors with much-needed data. Unfortunately, most investment property calculators are not free. There are a few investment property calculators that are free of charge. The catch is, however, that they tend to be basic in their calculations. They don’t offer much else besides rudimentary cash flow calculations. An investment property calculator’s cost may turn off a real estate investor, but overall, it is much better to have a rental property calculator than to not.
Pros of Using an Investment Property Calculator #2: Saves a Lot of Time
Calculating data isn’t the way many of us like to spend our free time. Luckily for real estate investors, rental property calculators take care of this issue. The extra time saved and efficiency an investment property calculator provides can speed up a potential property purchase. It can also help real estate investors use their time for other real estate ventures, such as searching for even more rental properties to expand their real estate investment portfolio!
Cons of Using an Investment Property Calculator #2: Overreliance on the Data
This con is more associated with the usage of a rental property calculator rather than the calculator itself. Investment property calculators help real estate investors find and analyze rental properties according to numbers the investor would like to have or see. The problem with this, however, is that real estate investors might reject a great or even excellent investment opportunity because the numbers do not exactly match up with their preconceptions. A great example of this is a real estate investor refusing to purchase a low-priced property because its projected rental income is not high enough. All it could take for the rental income to increase in this situation is some renovations.
There are two solutions to this problem. For starters, potential real estate investors should understand the numbers and different strategies associated with a rental property. Secondly, investors need to know how to narrow down choices properly during an investment property search.
Related: How to Narrow Down Choices During an Investment Property Search
Pros of Using an Investment Property Calculator #3: Makes Investing Much Easier
An investment property calculator eases real estate investing very, very much. So much so, that obtaining a rental property calculator is often the first step recommended for new real estate investors!
As mentioned in the previous pro, a rental property calculator helps real estate investors save a lot of time. It also saves energy, and makes preparing for an investment possible from the couch. Real estate investing is not a simple business by any means, so any opportunity to ease the process, and even produce better results, is welcomed.
Cons of Using an Investment Property Calculator #3: Too Much Research, Not Enough Action!
This disadvantage ties in with the previous one. It is not a con of the investment property calculator per se, but rather a con of using it. Sometimes a real estate investor may be so motivated to find the perfect investment property, that he/she ends up spending too much time searching for it. There’s nothing wrong with taking your time to find the right deal, but there is always a limit. Instead of going out there and tackling great investments, a real estate investor ends up endlessly searching for “the one” non-existent, flawless investment property.
Why You Need Mashvisor’s Investment Property Calculator
Mashvisor’s investment property calculator is the ultimate rental property calculator out there. It maximizes on all the pros mentioned in this blog, while reducing and eliminating the cons. For example, Mashvisor’s calculator provides real estate investors with the most accurate data available, through the use of predictive analytics. Mashvisor’s calculator isn’t just your run-of-the-mill cash flow computing calculator. Unique data, like Airbnb occupancy rates and much more, is also provided! The investment property calculator is also affordable and worth every penny. Time is a big deal for all of us, and Mashvisor’s calculator reflects that perfectly. It takes only a few minutes to analyze potential properties with the calculator.
Related: Mashvisor’s Investment Property Calculator: Real Estate Investing Made Easier
To have the ultimate real estate experience, start your trial with Mashvisor today!