The investment property calculator is a recently developed tool that is constantly gaining popularity in the field of real estate investing. Sure enough, there is a reason for this. The investment property calculator is considered to be one of the most useful tools for every real estate investor who wants to be successful and make money out of real estate. It is a typical assumption that the investment property calculator is smarter than the investor him/herself. “Why is that so?” is one of the commonly asked questions in real estate investing. Before jumping into answering the question, let’s explore what the tool actually is and why it is so helpful.
What Is the Investment Property Calculator?
The investment property calculator is a type of real estate investing tool. It is taking the place of the old method of gathering data, filling it in spreadsheets, and analyzing it later. Thus, the tool eliminates the need of collecting the data yourself, which is an extremely difficult and time-consuming task. Additionally, it provides fundamental investment property analysis as well as financial analysis, which are of crucial importance if you are willing to make money out of real estate. The investment property calculator provides much more accurate results compared to the old method. Moreover, it provides the results faster. Another great feature is that the real estate investor can access the data anytime, anywhere rather than carrying around filled in spreadsheets.
What Does the Investment Property Calculator Compute?
The investment property calculator computes various real estate metrics. Such real estate metrics include:
The cash flow represents the sum left after the real estate investor subtracts the money that outflow (costs associated with the property) from the inflow money (rental income). Real estate investors usually aim to invest in positive cash flow properties. This means that the money that they receive from the property is higher than the money that they need to pay as expense.
The cap rate is the rate of return on an investment property, based on the potential income that the property will generate. The cap rate is calculated by dividing the net operating income over the current market value of the real estate property.
Cash on cash return
The cash on cash return is the net operating income over the total cash investment. Also, the cash on cash return is used to indicate whether or not an investment in a real estate property is a good idea for the real estate investor or not.
Return on investment
Return on investment shows the return as a percentage of the investment. This is another of the real estate metrics used by real estate investors prior to investing in a real estate property as well as keeping track of the growth of the investment afterwards.
Potential rental income
The name speaks for itself. Potential rental income simply means that the investment property calculator presents the real estate investor with an estimated rental income he/she would receive if he/she invests in a specific real estate property and rents it out.
What About Mashvisor’s Investment Property Calculator?
Mashvisor’s investment property calculator can offer even more benefits compared to any other investment property calculator. For instance, Mashvisor’s investment property calculator will provide you with detailed neighborhood analysis. The latter is extremely useful when trying to make money out of real estate. Mashvisor’s real estate tool will present you with numbers regarding the occupancy rate, the median property price, etc. Moreover, the investment property calculator offered by Mashvisor will indicate the optimal rental strategy for the specific property. This is of crucial importance for the success of your rental real estate investing business. Additionally, the unique Mashmeter shows if a neighborhood is a good investment area. Last but not least, the real estate investor can choose a specific finance strategy that will provide more insightful and accurate results.
Why Is an Investment Property Calculator Smarter than an Investor?
As previously described, the investment property calculator is a pretty big deal when it comes to residential real estate investing. Nevertheless, let’s explore why such a calculator is smarter than an investor. There are three main reasons for that:
#1 The Investment Property Calculator Can Provide Quicker and More Accurate Results
Can you imagine computing all these real estate metrics on hand by yourself? It will certainly take a huge amount of time and effort to complete the task. First, you would need to collect the data and enter it manually using spreadsheets. Afterwards, you would need to compute all the needed real estate metrics. If you are willing to compare various properties and neighborhoods, the job multiplies. What’s more, you, as any other human, are more likely to make a mistake while doing the calculations in comparison to an actual technical tool such as the investment property calculator. Therefore, the investment property calculator is the smarter choice.
#2 The Investment Property Calculator Has Much More Data Available
Every successful real estate investor knows that having enough and right data is an essential step to 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. It is quite impossible to collect that much data yourself, let alone analyze it properly.
#3 The Investment Property Calculator Takes Into Consideration Many More Variables
Last but not least, the investment property calculator takes into consideration many variables when analyzing a property. Sometimes, the results might provide you with information you did not even think about. Thus, it is very useful to use such a tool in order to get the best information before making an investment in real estate.
Are you willing to learn more valuable information on various real estate topics? Keep reading on Mashvisor and don’t forget to check out our investment property calculator!