Investing in real estate can be time-consuming, especially for beginner real estate investors. Finding a suitable location, hunting for the best investment properties in that area, and analyzing an investment property of interest are difficult tasks to do. This is particularly true for investors who aren’t using a real estate investment calculator. If you aren’t using a real estate calculator, well, why?
We’re here to tell you that you should. Specifically, we’ll start with what an investment property calculator is, how it works, what it does, and where you can find the best rental property calculator there is.
What Is a Real Estate Investment Calculator?
First thing’s first, what is a real estate investment calculator? A real estate investment calculator, also known as an investment property calculator and a rental property calculator, is the most widely used tool for investing in real estate. The calculator performs the most essential tasks related to how to find investment properties. Some include:
- estimating rental income
- calculating rental property costs
- estimating the cash on cash return and cap rate
Essentially, this tool helps you find positive cash flow properties. In the past, Excel spreadsheets used to be the way to go. However, investment calculators have since revolutionized the way real estate investors find rental properties. Let’s take a look at how exactly.
How Does a Real Estate Investment Calculator Work?
So, how does a rental property calculator work? As mentioned previously, Excel spreadsheets were the go-to when analyzing investment properties before calculators were used. These spreadsheets required investors to manually insert the investment property and housing market data. This type of data is referred to as traditional analytics.
A real estate investment calculator, on the other hand, mainly utilizes predictive analytics, with some traditional analytics to complement the predictive data. What exactly is predictive analytics? This is a topic in and of itself. To learn what this data is, and why real estate investors should be thankful for it, read: The Power of Predictive Analytics in Real Estate Investing.
Why Should You Use a Real Estate Investment Calculator?
Now, what are the reasons why real estate investors should use investment calculators? There are three main reasons: to search for investment markets, to choose between multiple investment properties, and to analyze an investment property of choice.
Search for residential real estate locations
Location, location, location. The most important feature of investing in real estate is also the one that requires the most research. Without using investment tools, searching for residential real estate markets is bitter work. An investor would have to visit the city and narrow down a neighborhood to invest in, all the while, manually collecting data on market performance.
Instead of doing that, the investor could simply use a real estate investment calculator. Some of the best calculators gather housing market data which can be used to search for rental markets based on the investor’s inputs. Common inputs include property prices, rental income estimates, return on investment estimates, and rental strategies used in the market or neighborhood.
Find the best investment properties
Once an investor has found a suitable location to invest in, the next step is to find real estate investment properties. Again, finding income properties without the use of a calculator is very tedious. Finding an investment location is one thing, but narrowing down the potential best investment properties is even more difficult.
The solution is the same as finding an investing location. Using an investment property calculator allows you to find properties based on multiple criteria. These criteria include property prices, rental income estimates, cap rate and cash on cash return estimates, number of bedrooms, square footage, and much more.
Conduct an investment property analysis
Finally, once an investor finds a pool of positive cash flow properties, the last thing to do is settle on an investment property. Doing so without an investment property calculator takes too long. This can be disadvantageous, as another investor may make an offer during the time used to study the property using spreadsheets.
With a calculator, however, conducting an investment property analysis takes mere minutes. Much like a real estate market analysis, an investment property analysis breaks down the property in terms of the property price, rental income estimates, and return on investment estimates. The analysis can also study the property when it comes to financing, whether through a loan or cash, number of bedrooms and bathrooms, square footage, and rental costs. Some calculators can also act as an Airbnb profitability calculator, which can compute Airbnb occupancy rates, but more on this later.
Where Can You Find a Real Estate Investment Calculator?
Now that you know what a real estate investment calculator is, how it works, and what it does, it’s time to learn where you can find one. Unlike searching for properties, picking the best rental property calculator is not as difficult a choice or search. Luckily for you, the reader, you don’t have to look too far. Why? Because you can use Mashvisor’s investment property calculator! Mashvisor’s calculator is the best calculator you can find.
Why Should You Use Mashvisor’s Real Estate Investment Calculator?
What makes Mashvisor’s real estate investment calculator stand out from the rest? Its many ground-breaking features, of course! Airbnb occupancy rates, for instance, are not commonly calculated with calculators, but Mashvisor’s tools do provide these vital rates. Mashvisor’s interactive options also allow investors to conduct an accurate rental market analysis (using the heatmap analysis tool), investment property analysis, and return on investment analysis. The calculator also determines which rental strategy, traditional or Airbnb, is optimal for a given investment property. Finally, Mashvisor’s calculator gives each investment property a score based on its overall investment potential, allowing investors to know how well the investment would likely serve.
All in all, a real estate investment calculator is the ultimate tool used to invest in real estate. It’s the one tool we can’t recommend enough. To get your hands on a 14-day FREE trial with Mashvisor’s calculator, click here!