What is a rental calculator and where to you find the best one in 2021? We’ll answer this important real estate investing question in our article below.
Are you thinking of investing in rental properties in 2021? Owning a rental property is one of the best ways to generate cash flow and build wealth over time. The best way to ensure success as a rental property investor is to conduct an in-depth investment property analysis before making a purchase. This is the only way to guarantee a profitable investment. In the past, investors needed to spend weeks or months searching for rental data and perform key calculations with the help of traditional and Airbnb spreadsheet for analysis.
Fortunately, the advancement of real estate technology has made this process much easier than ever before and rendered spreadsheets obsolete. In this day and age, every investor should use a rental calculator to analyze investment properties. Keep reading to learn what a rental calculator is and where to find the best one for 2021.
What Is a Rent Calculator?
Also called a rental property calculator or an investment property calculator, this is an online tool that investors can use to compute key real estate metrics after inputting some basic data about an investment property that they plan to rent out. With these numbers, investors can decide whether or not the property is a worthwhile investment and compare its performance with the performance of other income properties in the area or nationwide.
A rental calculator usually uses big data and AI technology to predict the future performance of traditional and Airbnb rental properties. However, with the many rental calculators in the market, each with different capabilities and functions, it can be confusing which one to use. So, where do you find the best rental calculator for 2021?
Where Can You Find the Best Rental Calculator?
The answer is Mashvisor! Mashvisor’s rental calculator is the ultimate tool for real estate investors and a must-have real estate software for beginners. But why should you use this tool?
Mashvisor gathers property data from several reliable sources such as the MLS, Redfin, Zillow, Airbnb, ListHub, and more.
Using our algorithms on the real estate data, the rental property calculator provides accurate analytics that help investors make smarter investment decisions. Therefore, you don’t have to spend weeks collecting rental data and estimating the key numbers. In just a matter of minutes, you can conduct a comprehensive investment property analysis. With our real estate investment calculator, you reduce the chances of making wrong decisions due to bad calculations or losing lucrative investment opportunities to your competitors due to slow analysis.
What Data Does Mashvisor’s Rental Calculator Generate?
For each income property for sale on the platform or whose address you enter, Mashvisor’s real estate calculator will provide a number of important estimates that will help you determine how profitable the property is.
1. Rental Property Expenses
When analyzing a potential property investment, one crucial thing you need to find is the cost estimates. This includes the costs that you are expected to pay upon purchasing the property as well as recurring monthly expenses. Mashvisor is not just a monthly expense calculator like most calculators in the market. It also estimates the one-time start-up costs for you.
On the Expenses section of the calculator, you will see the following expenses estimates and the totals for each category:
One-Time Startup Costs
- Closing costs
- Furniture and appliances
- Home repair
- Home inspection
Monthly Rental Expenses
- Property maintenance
- Property tax
- HOA dues
- Property insurance
- Rental income tax
- Property management
- Marketing your rental property
Our investment property calculator also allows you to edit these expenses or add custom expenses such as rental income tax rate as you see fit. This will help you get even more accurate calculations based on your specific situation as as investor.
2. Rental Income
Knowing how to calculate monthly income generated by an investment property is crucial before making a purchase. This data is needed to estimate the potential cash flow and return on investment. With our monthly income calculator, you can access this traditional and Airbnb data without having to research similar properties in the area on your own.
3. Cash Flow
Cash flow is one of the most important metrics to consider when buying rental property. This is the difference between monthly rental income and monthly rental expenses. Having positive cash flow is the only way to make money with rental properties. Therefore, you should aim for positive cash flow when looking for an income property to purchase. You will be able to save money for unexpected expenses and also investment in new properties. You don’t have to do cash flow calculations on your own as our rental income calculator is also a rental cash flow calculator.
4. Capitalization Rate
Your investment property analysis won’t be complete if you don’t calculate return on investment. One of the most important return on investment metrics used to analyze potential real estate investments is cap rate. Cap rate compares the net operating income to the market value of an investment property. However, you don’t need a separate net income calculator as Mashvisor’s cap rate calculator calculates NOI and cap rate for you.
Whether you know how to calculate cap rate using the cap rate formula or not, you should use our real estate calculator as it is faster and more accurate than manual calculations and helps you avoid bad decisions due to human errors. You can access cap rate estimates for monthly rentals as well as vacation home rentals in the US housing market with the click of a button.
5. Cash on Cash Return
If you are considering using a loan to buy your investment property, cash on cash return is the metric to focus on. This is because, unlike cap rate, cash on cash return takes into account the financing costs. It is the ratio of the annual pre-tax cash flow to the total capital investment. Fortunately, you don’t have to memorize the cash on cash return formula as you can get accurate estimates with our ROI calculator.
6. Occupancy Rate
A rental property’s occupancy rate is the percentage of time that it is occupied within a set period of time, usually a year. It is determined by many factors such as location, the booking rate of comparable rentals nearby, amenities, rental rate, and many others. The easiest way to estimate traditional and Airbnb occupancy rates is to use Mashvisor’s rental calculator.
What Makes Mashvisor’s Investment Property Calculator Unique?
A number of different online rental property calculators in the market can help you determine the profitability of a rental property by calculating key real estate metrics. But what makes Mashvisor’s investment property calculator the best one?
Here are 5 unique features that differentiate Mashvisor’s rental calculator from the rest in the US housing market in 2021:
1. Mortgage Calculator
Your financing method will have a huge impact on your potential cash flow and return on investment. When you are shopping around for an investment loan, you should keep in mind that rental property mortgage rates and terms differ from one lender to another. That’s why Mashvisor’s rent calculator has an inbuilt mortgage calculator that allows you to determine your optimal financing method.
You simply enter your mortgage details (down payment, loan amount, loan term, mortgage type, interest rate) and you’ll instantly be able to see how your potential cash flow and cash on cash return is affected.
2. Neighborhood Analysis
When it comes to rental property investing, location is the most crucial factor to consider. You need to compare the average ROI on rental property for different neighborhoods in your city of choice to have a view on which is the most profitable one. Mashvisor’s real estate app allows real estate investors to quickly determine the neighborhood’s value based on neighborhood stats.
When you click on a neighborhood’s name, you will be taken to the Neighborhood Analytics Page. Here, you will find detailed information about that neighborhood. This includes:
- Median price
- Traditional cash on cash return and cap rate
- Airbnb cash on cash return and cap rate
- Traditional and Airbnb occupancy rate
- Optimal strategy (Airbnb vs traditional renting)
- Mashmeter Score: A unique score calculated by our machine-learning algorithms to evaluate how good a neighborhood is for investing in long-term and short-term rental properties
- Historical rental income
- Neighborhood comps
- Optimal property type
- Optimal number of bedrooms
3. Optimal Rental Strategy
Another unique feature that differentiates Mashvisor’s rental calculator from other rental calculators is that it is perfect for analyzing both Airbnb rentals and traditional long-term rentals. Your rental strategy has an immense effect on the profitability of your investment property. Therefore, you need to choose it wisely.
For each of the key real estate metrics, Mashvisor’s calculator provides the property’s performance data as an Airbnb and traditional rental. This comparative data helps you to easily determine the optimal rental strategy. If you are looking to invest in short-term rentals in the US housing market, Mashvisor is the best Airbnb estimator.
4. Real Estate Comps and Rental Comps
If you want to accurately analyze an income property, you need to look at how other similar properties in the area are performing. This is particularly useful when you want to answer the questions “How much is the property worth?” and “How much can I rent my house for?”.
Real Estate Comps
An investment property is not necessarily worth the listing price. You need to look at recent sales of similar properties (real estate comps) to determine the fair market value of the property you are analyzing. This will help you avoid paying more than what the property is worth. Mashvisor functions as a how much should I pay for a rental property calculator that provides accurate real estate comps to help you determine the value of a property before buying.
Before you rent out your house, you need to determine how much to charge for rent. The best way to find a rent estimate that will maximize rental income and minimize vacancies is to look at what other rental properties in the area are currently charging for rent.
This is easier with Mashvisor’s rent calculator (rent estimator) as it provides both Airbnb and traditional rental comps for rental properties in the US housing market.
5. Investment Payback Balance
Investment payback balance is the amount of profit that your investment property will have generated or lost after a particular period. This helps you know the projected performance of the income property and how long it will take to generate a certain amount of money.
Mashvisor’s rental calculator computes Airbnb and traditional Investment Payment Balance on a monthly and yearly basis for up to 10 years. It takes into account the gross revenue, net rent, total expenses, start-up costs, Airbnb tax, and cash flow. Mashvisor also provides a graph version of the investment payback balance to give you a quick visual overview of the rental property’s future performance.
The Bottom Line
Using a rental property calculator when investing in rental properties can help you make smarter, data-driven decisions. However, not all rental calculators are made the same. If you are looking for the best one in the market right now, be sure to use Mashvisor’s real estate calculator. Our calculator is highly accurate and offers additional unique data and insights.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.