A Real Estate Investment Return Calculator for Buying the Most Profitable Properties

Finding the best properties for investment is made a lot easier when you use a real estate investment return calculator. I’m pretty sure the majority of you out there hate math- it’s a universal opinion. Unfortunately, real estate investing involves a lot of numbers. And even if you do like math, it can sometimes be difficult trying to understand all the logistics involved in buying an investment property. That’s where a real estate investment return calculator comes in. Here’s the best one for the job.

Mashvisor’s Real Estate Investment Return Calculator

Out of Mashvisor’s many real estate investment tools, our rental property calculator has got to be the go-to tool for any investor. Let’s find out why that is.

What Is a Rental Property Calculator?

It’s another word for real estate investment return calculator. It is a digital online tool that investors and landlords can use to get a better measure of their property’s profitability and performance.

The way it works is first, the user inputs basic information about the prospective property (purchase price, financing method, expenses, etc.). Then the calculator will be able to determine key metrics and measures regarding the expected return on this investment.

On the premise of these key calculations, real estate investors can get an accurate valuation of the property. This will let them know how profitable it is expected to be and whether or not it’s worth the investment.

Why Go for Mashvisor’s Calculator?

The key factor that makes our tool the optimal calculator for finding profitable properties is that it uses both traditional and predictive analytics. With the use of past and present data, our tools are able to make accurate and reliable predictions about how things will play out in the housing market.

Our real estate investment return calculator has three main categories: financing method, expenses, and results. Users can tune the calculator’s results based on how they’re financing an investment property (cash or mortgage). You’ll then be given a list of the average expenses in your property’s area. Users can, of course, modify or adjust the predetermined numbers according to property-specific details.

Related: Buying an Investment Property: Cash or Mortgage

The final category is the results. We’ll go more in-depth explaining the relevance of each final calculation later. But first, let’s list them. Here is another aspect where Mashvisor’s tool is different from others when doing an investment property analysis. Our real estate investment return calculator provides results for both traditional and Airbnb rental strategies. So that means users can get these main metrics:

#1. Traditional Rental Income & Airbnb Rental Income

#2. Traditional Cap Rate & Airbnb Cap Rate

#3. Traditional Cash on Cash Return & Airbnb Cash on Cash Return

Our real estate investment return calculator uses real estate comps to get averages for the area you’re investing in. This way you can also analyze investment properties you already own. Our tool will conduct a real estate market analysis and conclude which is the optimal rental strategy for this specific investment property; this is all of course according to the results obtained for each metric under both strategies.

Related: The Airbnb Profitability Calculator: The Best Friend of the Short-Term Rentals Investor

Real Estate Investment Return Calculator: The Final Metrics

The results of Mashvisor’s calculator will ultimately lead you to make the best investment decisions. Here’s a breakdown of each metric and what it means in an investment property analysis.

Traditional/Airbnb Rental Income

Rental income is one of the most important factors in finding positive cash flow investments. Our real estate investment return calculator will help you find profitable properties by letting you know how much rental income your investment will make under each strategy.

This is crucial information to know. Why rent out this property long-term (traditionally) if you can generate more rental income with the short-term strategy (Airbnb)? Rental income also helps determine the relative cash flow of this property. Our calculator takes into account the monthly expenses as well as the occupancy rate to accurately estimate cash flow.

Traditional/Airbnb Cap Rate

As many of you already know, cap rate is short for capitalization rate. With the real estate investment return calculator, cap rate is a key result because it takes into account the net operating income (NOI) and the property’s current market value. This makes it a good indicator of how valuable it is and whether it’s profitable in relation to its value.

Because the amount of rental income differs based on rental strategy, so does the cap rate. A property’s value can differ substantially when looking at the different cap rates it has under each strategy.

Real estate investors also use cap rate to measure the relative riskiness of the investment. A high cap rate means a high-risk investment whereas a low cap rate means a low-risk investment.

Traditional/Airbnb Cash on Cash Return

Cash on cash return (CoC) is considered one of the most important metrics in real estate investing. What differentiates it from cap rate is the method of financing an investment property. Here the CoC takes into consideration how a mortgage can affect the profitability of an investment by comparing NOI to the amount of cash invested.

In the case of financing the investment with cash, CoC doesn’t differ from cap rate. However, in the more common case, taking out a mortgage, only the down payment and any cash paid to procure the property is included in the calculation. The rest of the money invested in this property from a loan won’t be involved in the CoC calculation.

Cash on cash return is a key metric because it gives investors a more realistic measure of the kind of returns to expect. And just like rental income and cap rate, CoC differs for the same investment property based on the rental strategy.

Related: What Is a Good Annual Return on Investment on Rental Property?

A Couple More Things to Know

In addition to what was mentioned above, Mashvisor’s real estate investment return calculator really does have something special to it. Extra features such as neighborhood analysis, property analysis and more make it indispensable for thousands of investors across the country.

Related: Neighborhood Analysis in Real Estate Investing

You can start finding profitable properties with our real estate investment return calculator and many other tools today! Just Sign Up for Mashvisor to start investing smartly.