How can you be sure you’re buying a good investment property? The key is to use a reliable real estate investor calculator to determine its ROI.
Investments in rental properties are typically capital-intensive, cash-flow dependent, and come with low liquidity. On the other hand, rental property investments are generally more secure, provide tax advantages, and are more likely to protect against inflation than equities markets. As a result, they can become successful and valuable investments with proper financial research.
Table of Contents
- What Is the Best Real Estate Investment Calculator?
- What Is a Fair Percentage for a Real Estate Investor to Make Money?
Real estate investing, if done correctly, can be very rewarding. It can help broaden an investor’s portfolio and provide an additional source of income at the same time. Additionally, many of the top real estate deals don’t involve attending to every tenant’s call. To succeed in real estate, you need to know the best rental markets and make sure to choose them.
Now, the reality is that without a real estate calculator, discovering a real estate property that generates your desired income might be difficult. On the other hand, there are numerous investment calculators available in the market today. However, Mashvisor’s real estate investment calculator is considered one of the best you can find on the market.
This article is the perfect place to begin if you’re considering investing in real estate. Continue reading to determine why you should check Mashvisor’s real estate investor calculator before purchasing an investment property in the US (with a few tips and tricks).
What Is the Best Real Estate Investment Calculator?
The best real estate investor calculator should be able to provide accurate computations for the potential returns of an investment property. There are many investment calculators available in the market, and finding one that suits you best can be challenging. When choosing the best rental calculator, it’s important to know what factors to consider.
Different kinds of investment calculators can assist novice investors just getting started in the industry in making the right decisions. Even if you’re an experienced investor, using a real estate calculator may make purchasing a home a lot easier.
However, while there are several real estate calculators available online, not all of them are created equal. Some rental property calculators do not provide the same features as others. So, what should you really look for when deciding which investment property calculator to use?
Here are a few things that you should keep in mind when looking for the best real estate investment calculator:
- Data availability: The best real estate investor calculator should be able to provide all the necessary real estate data without the need for you to do your own research.
- Accuracy: The tool is reliable in providing accurate and up-to-date information based on actual research and analysis.
- ROI metrics: In real estate, there are various metrics that you should consider when it comes to evaluating an investment property’s profitability. The best real estate investment calculator should be able to show the different rates of measures. The measures include the cap rate, cash on cash return, occupancy rate, and cash flow.
- User’s ability to interact: The best investment calculator allows its users to input their own figures and adjust or customize some information, making the results more accurate based on their preferences and plans.
What Makes Mashvisor’s Real Estate Investor Calculator the Best?
Mashvisor is a real estate analytics platform that provides various real estate tools to help both new and seasoned investors find the best rental property to invest in. One of such tools is the rental analysis calculator, which can help you calculate potential earnings in just a few minutes. That’s why Mashvisor’s real estate calculator is considered the best in the market.
Other calculators require you to input some basic information, including the property’s occupancy rate, monthly rental income, and expenses. You’ll need to conduct your own research to acquire the necessary data—and it can take a lot of your precious time. Furthermore, manual data gathering can be prone to error.
This is where Mashvisor’s rental property calculator differs from other similar tools available in the market. Here are a few of the reasons why Mashvisor is the best real estate investment calculator:
Mashvisor Provides All the Necessary Real Estate Information
Mashvisor’s real estate investor calculator makes things a lot easier for you because all the necessary information is already provided. In short, you don’t need to do any research outside the platform to find out the important real estate data to calculate a property’s potential returns.
It Allows You to Search for Potential Investment Properties for Sale
Moreover, the real estate investment calculator of Mashvisor is a reliable digital tool that can assist you in locating profitable investment properties for sale throughout the US. It means that the tool offers an investment property search function, too. It is in addition to calculating the possible return on investment a particular income property can generate.
Let’s say you must find the correct location, buy the best real estate investment property, and adopt the best rental strategy to make a lucrative real estate investment—all of them can be accomplished with the help of a real estate investment calculator from Mashvisor.
The calculator manages the entire process by allowing you to search for and evaluate both neighborhoods and investment homes. Everything you need to do is submit some basic data based on your real estate investing criteria, and the calculator will take care of everything else.
Mashvisor’s Calculator Offers Fast, Precise, and Effective Results
Since the calculator employs both traditional and predictive analytics, Mashvisor’s real estate software is fast, precise, and efficient. When analyzing potential real estate deals, you’ll save a considerable amount of time and effort when you use Mashvisor’s investment property calculator.
Mashvisor’s Calculator Computes for More Than Just One ROI Metric
When it comes to analyzing the possible return on investment in real estate, you need to determine several metrics to ensure that you’ll make the right decision. Mashvisor’s real estate calculator can help you with this because it includes the cash flow, cap rate, and cash on cash return on its computation.
Mashvisor Performs Other Functions, Too
Other than providing you with figures to know how much you can potentially earn from a certain investment property, Mashvisor tools also perform other functions that are valuable to you. For example, it can help you analyze the best rental strategy for a particular income property. It also allows you to study the neighborhood, as well as other similar properties in the area.
Moving on, let’s see in detail how Mashvisor’s real estate rental investment calculator can benefit you and beyond. The tool can help with everything—from analyzing the neighborhood to knowing the return on investment (ROI). It is also valuable in conducting an investment property analysis.
Here are a few of the most important features offered by Mashvisor’s online real estate tool:
Real Estate Return on Investment Calculator: Neighborhood Analysis
Location is the most significant element in real estate investments because it determines your ROI the most. To find the best investment property, you must first identify the best-performing markets. In order to do it, you’ll need to undertake complete real estate market research.
When it comes to investing in real estate, it’s simple to pick a place to invest in because city data can be gathered online, such as on Mashvisor’s real estate blog. However, it is only part of your real estate analysis. To ensure success in your investment, you must limit your property search to a specific neighborhood in your desired city.
Similar income properties in various parts of town can command significantly different prices and produce widely divergent returns. Mashvisor’s return on investment real estate calculator makes it simple and fast to locate the perfect neighborhood for your wallet and investment plan.
With Mashvisor’s real estate investment return calculator, investors can conduct a comprehensive neighborhood analysis with just a few clicks.
Note: The Mashvisor calculator can generate a precise estimate, informing you how much rental income you may expect. It does the computations by utilizing big data and AI capabilities. Furthermore, Mashvisor’s data is sourced from reputable real estate data sources, such as MLS, Airbnb, and Zillow.
Real Estate Investor Calculator: Heatmap Feature
Mashvisor’s real estate heatmap is a quick and efficient approach to starting your investment property search. It displays the profitability of neighborhoods in your chosen market using various color codes based on several metrics. The metrics include pricing, short term and long term rental income, cash on cash return, and short term rental occupancy rate.
You may use Mashvisor’s real estate investment return calculator to research top-performing areas after identifying the best neighborhoods that meet your criteria.
For example, on the Neighborhood Analytics Page, the real estate investment calculator will give the following neighborhood-level real estate data and analytics:
- Number of short term and long term properties for sale
- The optimal number of bedrooms
- Optimal property type
- Average short term occupancy rate
- Average short term and long term cash on cash return
- Average short term and long term rental income
- Average price per square foot
- Median price
- Walk Score
- Real estate comps
- Mashmeter Score
- Optimal rental strategy
Other Additional Features Worth Checking Out
The neighborhood insight feature allows you to learn more about the best home type, the number of bedrooms, and the rental strategy to utilize in your area (short term vs. long term).
The Mashmeter, which is expressed in a percentage form, delivers each neighborhood a rating that can be compared to other communities in the same or another city. Property investors can view the Mashmeter rating through Mashvisor’s platform.
- Mashmeter: The Mashmeter is a one-of-a-kind tool that can only be found at Mashvisor. It allows the real estate investor to determine whether investing in a specific neighborhood is a good or poor idea. The score is calculated as a percentage based on the qualitative and quantitative data gathered.
- Optimal Rental Strategy: Mashvisor’s investment return calculator uses the information gathered to provide an estimate of the optimal rental strategy in a specific neighborhood. You will find out if the area is ideal for either short term or long term rentals.
Selecting a neighborhood with a high-income potential is a proven method to make money in real estate. You can now determine the best spots to invest in a couple of minutes using Mashvisor’s tools. The tools replace the need to spend weeks or even months visiting areas and conducting manual market research,
Mashvisor’s return on investment calculator in real estate also lets you obtain a detailed report for the location you’re looking at. The calculator’s report contains all of the neighborhood’s property listings and their statistics in Excel format, so you can simply compare them.
What’s more, you can also share the documents with your real estate agent or colleague for feedback before proceeding with your property search.
Real Estate Investor Calculator: Investment Property Analysis
After deciding on a neighborhood for investment, the following step is to locate the most profitable income property for sale that you can purchase. It will require a thorough examination of several property listings within your price range that also meet your other investment criteria.
Based on your neighborhood analysis, you should limit your search to such real estate properties. It is because you already know the best property type, property size, number of bedrooms, and rental strategy.
As a real estate investor, you should use Mashvisor’s Property Finder to make your search process easier and smoother. The tool provides a simple and practical approach to searching for investment properties. The program will search your target market for homes that meet your particular criteria and offer a good return on investment (ROI) potential.
Now, you must undertake a thorough examination of the properties. Mashvisor’s real estate investment return calculator will come in handy. You’ll get a range of useful investment property data for each property you evaluate, such as:
Mashvisor’s tool provides the one-time initial expenses and ongoing rental property expenses associated with the property. Recurring monthly expenditure projections help calculate future cash flow. On the other hand, one-time start-up cost estimates will assist you in understanding your initial investment.
The estimated costs include the following:
One-Time Startup Costs
- Closing expenses
- Inspection of the house
- Equipment and furnishing
- House repairing
- Property insurance
- Property tax
- Expenses for property management
- HOA/condo dues
- Tax on rental income
Rental income is the cash investors receive from renters who occupy your property. It is one of the most important factors for deciding if a property is worth investing in.
Again, if you want to make an educated decision—which you should—Mashvisor’s rental investment calculator can help you find an accurate estimate of the rental income of a property. Because our calculator estimates rental revenue, the rate of return on the real estate investor calculator can also be used as a rental estimator.
However, you’ll need to research rental competitors in the region to evaluate the rental revenue on your own, which is a time-consuming task. Mashvisor’s real estate investment calculator saves you time by quickly providing Airbnb and traditional rental income predictions.
If you only wish to know the estimated potential rental income of a specific property, you can use Mashvisor’s free Airbnb calculator.
Cash flow refers to the inflows and outflows of cash within your rental business. It is one of the most important ROI measures for investment properties since it represents the difference between a rental property’s income and its overall costs. It informs investors about the possible returns they might expect from a particular income property.
As an investor, you should aim for a positive cash flow property. It refers to an investment property that generates higher income and incurs lower expenses—that the remaining cash flow is positive. A positive cash flow property means you’ll have more money left from your income after you pay for the costs associated with owning and operating a rental investment property.
You can evaluate the future cash flow of a certain property using the property’s rental income and cost estimations. However, with Mashvisor, you won’t need to do it manually. The platform’s cash flow calculator will calculate the potential cash flow of a specific income property on your behalf.
The calculator will help you assess whether or not a property is viable. To display the possible cash flow, it covers all expected expenses, including management and electricity charges, taxes, HOA dues, and even housekeeping fees. In general, it is advised that you only invest in properties that provide positive cash flow, especially if you are new to real estate investing.
Return on Investment (ROI)
The primary goal of conducting rental analysis and property research for real estate investors is to explore the likelihood of profitability. A rental property’s return on investment (ROI) is a good indicator of profitability. Cap rate and cash on cash return are the two most crucial ROI measures, which we will discuss in a while.
Manually performing the above calculations on your own can be challenging, particularly when you need to examine several rental property listings. Fortunately, you may use our real estate investment calculator to quickly estimate the property’s potential ROI.
In addition, our return on investment real estate calculator includes a mortgage calculator for investment properties. Depending on the mortgage data you enter, the calculator’s interactive feature helps to evaluate your projected cash flow and cash on cash return.
It covers the purchase price of the property, the loan amount, the kind of mortgage, the loan duration, the down payment, and the interest rate.
Cash on Cash Return
In basic terms, the cash on cash (CoC) return is the rate of return on investment (ROI) that an investor will get on a real estate investment, depending on the initial cash you invested. In short, to calculate the CoC return, you need to consider the profit that a property generates, as well as the amount of money you put into the rental property in cash.
Put another way, cash on cash return tells property investors what percentage of profit they can expect based on how much money they put in. The initial cash investment usually includes the down payment for the mortgage, closing costs, and rehab costs. CoC return will be greatly useful if you plan to buy the property through a loan.
The capitalization rate, or cap rate, is another real estate investment’s profit metric that can help determine the potential returns of an income property. Unlike the cash on cash return, the cap rate considers the value of the property rather than the initial cash invested. Simply stated, the cap rate refers to how much of the property’s value an investor receives as income.
Moreover, a cap rate is an essential metric for determining how risky an investment is. The larger the cap rate, the greater the risk and the potential return will be. In contrast, the lower the cap rate, the more negligible the risk and the lower the anticipated gains.
While the cap rate equation is easy to understand, manually calculating the cap rate for each possible investment property is relatively impractical. Instead, it’s best to utilize a reliable cap rate calculator. The calculator can assist you in quickly and properly estimating a property’s potential cap rate, and this will come in handy if you’re assessing several rental properties.
Mashvisor’s real estate calculator is an excellent solution. It calculates the cap rate, rental income, cash on cash return, and occupancy rate at the same time. As a result, it helps you determine the best real estate location to invest in and the perfect property to purchase.
The short term rental or long term rental occupancy rate is a metric for rental demand that significantly impacts your rental income and ROI. However, predicting occupancy rates is difficult because it depends on numerous factors. They include the property type, current market trends, how appealing the location is, and marketing abilities, to name a few.
Depending on the success of real estate comps, Mashvisor’s investment property calculator will provide precise occupancy rate forecasts.
Optimal Rental Strategy
You should first explore the two basic rental tactics before addressing how to choose the optimal rental property strategy for your property investment. It will help you understand the connections and differences between the two and decide which rental strategy is best for you.
With Mashvisor, you’ll obtain statistics for both short term and long term rental techniques for each critical metric provided by the real estate investor calculator. With this, you will find it easier to assess and decide which is the best rental strategy for your chosen investment property.
Real Estate Comps
To prevent overspending, real estate investors should look at previous sales of similar homes in the region (known as real estate comparisons) to see if the purchase price is appropriate. Also, investors should consider the rates offered by comparable rental listings in the area when estimating rent. The rental estimate can help check if the property can generate enough profit.
Mashvisor’s real estate tools make finding rental comps easier. The platform will provide you with a list of comparables and other information to help you make your own comparisons. The process is crucial in deciding whether such a rental property will make a good investment.
Are you ready to look for the best investment property in your desired location? Start a 7-day free trial with Mashvisor now.
What Is a Fair Percentage for a Real Estate Investor to Make Money?
In theory, you should expect an annual rate of return on a real estate property ranging from 7% to 13%. Residential real estate investment returns average roughly 11%, compared to 10% for commercial real estate.
Of course, you anticipate earning money when you invest. Rental revenue often accounts for a large portion of the return on investment (ROI) for real estate investors. It might be difficult to tell which property would provide a positive cash flow while searching for a lucrative deal. Fortunately, there are methods you can use to quickly estimate the profit potential of a property.
Discover how to use the 1% rule and 50% rule in real estate to help you select the ideal investment property. The 1% rule can also be used to establish the right monthly rental rate to ensure that an investment property becomes profitable. On the other hand, the 50% rule can help you set aside cash to prepare for any possible downtime, such as unexpected vacancies.
The 1% Rule
The 1% rule compares the purchase price of an investment property to the gross income it will generate. To meet the 1% criteria, a potential investment’s monthly rent must be equivalent to or more than 1% of the purchase cost.
For example, if the property’s purchase price is $150,000, you should be able to rent the property out for at least $1,500 per month. If you find a property that meets the 1% rule, it will most likely be a good and profitable investment.
If you intend to purchase an investment property, the 1% rule can help you identify the ideal property to meet your financial goals. You may use it to determine how much money the property will generate rapidly. If the house is currently vacant, you can utilize the rule to help you set the monthly rent.
It’s crucial to remember that the above rule is only a recommendation. It’s a great place to start when looking for a profitable investment and deciding how much rent to charge your tenants. However, you should also consider additional criteria to help you choose the most appropriate rental rate for your rental property.
How to Use the 1% Rule
The 1% rule is fairly easy to use. Simply multiply the property’s purchasing price by 1%. You will get the bare minimum that you should charge in monthly rent. If the house needs any repairs, investors should consider the cost into the equation by adding them to the purchase cost. It will result in an increased rental rate based on 1% of the total cost.
The 50% Rule
Some real estate investors also use the 50% rule to determine the profitability of a certain rental property. The principle, as the name implies, requires subtracting 50% of a property’s monthly rental revenue when estimating prospective earnings.
According to the said criterion, 50% of rental revenue should be labeled as costs. Ignore the remaining potential rental revenue when comparing prospective earnings to monthly mortgage or debt repayments.
Moreover, undervaluing the cost of bills is one of the most common mistakes investors make when looking for the best deals. It can result in decreased profit margins or, in rare situations, an investment that fails entirely. To protect against unforeseen expenditures and charges, including unexpected vacancies, investors should implement the 50% rule into their first review of a deal.
How Does the 50% Rule Work?
The 50% rule works by splitting the entire monthly rental revenue in half. It would account for any possible expenditures related to the property’s ownership. Repair charges, taxes, property maintenance fees, utilities, and insurance prices all fall under the potential expenses.
The rule does not require investors to know the actual expenditure amount. In reality, investors use the 50% rule to estimate opportunities rapidly and accurately based on minimal information.
One thing to keep in mind is that mortgage or loan payments are not considered expenditures under the 50% rule. As a result, you should make sure that the remaining 50% portion of your rental revenue should be able to cover the monthly mortgage, with more money left as profits.
The rule can also be applied to a variety of residential property types, including single family houses, multifamily homes, condominiums, duplexes, and apartment buildings. Its adaptability makes it extremely useful when you come upon a prospective offer and need to act quickly.
Finding the perfect investment property in the appropriate real estate market is vital if you want to be a successful real estate investor. The process involves a thorough analysis of the area and the property itself. You will need to find the correct information, data, and tools.
Luckily, Mashvisor is a one-stop real estate investment tool that helps thousands of real estate investors make informed decisions. For instance, Mashvisor’s real estate investor calculator will be able to help you decide which investment property will generate the best possible returns.
The investment calculator allows you to handle complex math and select the best property that meets your budget and other criteria. It also lets you estimate your prospective profits based on several factors and metrics, including cash flow, cash on cash return, and cap rate.
As a result, you can perform your own property search and analysis without spending too much time in one city generating spreadsheets and calling agents. Also, you can trust that Mashvisor maintains and frequently updates its database, which covers the entire US housing market. Hence, it allows you to find the right investment in no time.
Whether you’re a first-time or seasoned investor, you will greatly benefit from Mashvisor’s reliable and accurate estimations.
Experience how Mashvisor works wonders for your real estate investing journey. Schedule a demo now to see how its real estate investor calculator works.