There’s no doubt about it, real estate cash flow is a MUST for any rental property. To ensure you have cash flow properties, you will need analytics. For the longest time, a cash flow analysis required the usage of Excel spreadsheets. Real estate investors would have to spend ample amounts of time compiling and entering data into spreadsheets for analysis. This is no longer the case, however, since the advent of the investment property cash flow calculator. With a cash flow calculator, what could be months’ worth of cash flow analysis is condensed to mere minutes. In today’s blog, we’ll take a look at what exactly an investment property cash flow calculator is and where you can find the best one for 2020.
What Is Cash Flow?
Before we talk about what an investment property cash flow calculator is, let’s explain what cash flow is. Cash flow is the difference between rental income and rental property expenses. Essentially, cash flow tells real estate investors the net amount of profit they are making through investment properties. As such, a net positive, or positive cash flow, is the goal of any rental property investment. A negative cash flow, on the other hand, is when rental expenses outweigh rental income, yielding a net loss. With this in mind, you should focus on finding positive cash flow properties when investing in real estate.
Here is the cash flow formula:
Cash Flow = Total Rental Income – Total Rental Property Expenses
Examples of rental property expenses include:
- Property taxes
- Rental income taxes
- Property insurance
- Management costs
- HOA dues (for condo investments)
- Property maintenance costs
- Utility costs
- Cleaning fees (for Airbnb rental properties)
What Is an Investment Property Cash Flow Calculator?
As you have just seen, there are a lot of variables associated with rental property cash flow. If rental income is overestimated, for instance, the actual cash flow of a property will be grossly minimized. With many factors, the room for error is magnified when you’re using Excel spreadsheets to manually analyze the cash flow of a few rental properties for sale. The solution to this problem is to use an investment property cash flow calculator. A cash flow calculator can conduct a cash flow analysis in a number of minutes. The analysis takes location and property characteristics into account. As a result, real estate investors will have a complete understanding of cash flow investing for real estate investments. Therefore, they will be able to find positive cash flow investments and immediately make money from their rental properties.
Where Can You Find the Best Cash Flow Calculator?
So, where can you find the best investment property cash flow calculator? You’ll find it with the best real estate investment software – Mashvisor! Our calculator uses big data, predictive analytics, and algorithms, and has interactive capabilities. All of this makes it the best cash flow calculator on the market. Not only does Mashvisor compute traditional property data, but it also provides Airbnb analytics for cash flow. Here are four functions of Mashvisor’s investment property cash flow calculator.
Estimates Monthly Rental Costs
The bulk of the data in a cash flow calculation comes from property expenses. As a result, Mashvisor provides estimates for all the rental expenses of an investment property for sale, traditional and Airbnb. These include all types of recurring expenses, such as maintenance, and one-time start-up expenses, such as closing costs. This property data is calculated using reliable rental comps which helps us provide accurate estimates. As mentioned previously, the calculator is interactive. So, it will allow you to adjust and add costs based on your own research and needs.
Projects Monthly Rental Income
The second main variable in the cash flow calculation is rental income. Unlike the sum of rental property expenses, rental income is not composed of a variety of other figures. Still, it must be as accurate as possible when calculating cash flow. Mashvisor’s investment property cash flow calculator uses property data from rental comps along with predictive analytics to estimate monthly rental income. In addition, Mashvisor calculates both the traditional and Airbnb rental income of investment properties for sale.
Calculates Cash Flow
With the sum of property expenses and rental income at hand, Mashvisor’s calculator calculates rental property cash flow. As you would expect, both traditional and Airbnb cash flow are displayed for each income property. The investment property cash flow calculator also allows real estate investors to adjust for factors, such as rental income and financing costs, to see the effect on cash flow. As a result, you can find out how to maximize the positive cash flow of your investment property.
Computes Return on Investment and Determines the Optimal Rental Strategy
With the cash flow computed, Mashvisor also calculates various return on investment (ROI) metrics. These include cap rate and cash on cash return for both traditional and Airbnb strategies. These ROI metrics ensure that you not only have the best cash flow investments, but also the best rate of return on your properties.
Finally, Mashvisor’s calculator also tells investors which strategy, traditional or Airbnb, is best suited for their rental property. The detailed strategy comparisons of cash flow and ROI are all you need to know what strategy to pursue with your rental.
Cash flow is a vital piece of real estate data every investor needs to know. A positive cash flow is what leads to profit in real estate. In order to know if your property will have a positive cash flow, you need to use an investment property cash flow calculator. The best cash flow calculator for residential rental properties is Mashvisor’s calculator. Mashvisor’s cash flow calculator performs this central function, and many others, for every rental listing in any rental market in the US using reliable traditional and Airbnb data. To start a 7-day FREE trial with Mashvisor’s cash flow calculator, and other real estate tools, CLICK HERE!