Buying rental property has been revolutionized with the rental income property calculator. Gone are the days of wasting hours and hours researching one investment property at a time. No more spreadsheets and complicated investment property analysis- the rental income property calculator will do it all for you.
So, what is this investment calculator that everyone is talking about? Keep on reading to learn what it is and where to find one!
What Is a Rental Income Property Calculator?
As the name implies, a rental income property calculator (also referred to as investment property calculator) is a real estate investing tool that provides investors with important numbers and calculations called real estate metrics. These numbers are necessary to evaluate the profitability of income generating properties. Basically, all this online application does is tell you whether an investment property is worth investing in or not.
Related: Mashvisor: The Best Rental Property Calculator You Could Ask For
What Does a Rental Income Property Calculator Include?
The main purpose of a rental income property calculator is to help real estate investors make better decisions by using return on investment analysis. An advanced rental property calculator will include the following:
- Interest rate: An investment property calculator includes property financing methods and the ability to account for different types of mortgages with their respective interest rates. Including mortgage payments in the investment property analysis gives more accurate return on investment results.
- Cash invested: The down payment you put when investing in rental properties is also included in an investment property calculator.
- Total depreciation: Calculating property depreciation is important for real estate investors as they can use it to deduct taxes. A rental income property calculator comes in handy as it already includes property depreciation.
- Annual operating expenses: Owning a rental income property costs money. You have to pay property insurance, property tax, management fees, repairs, etc. A rental property calculator estimates all these figures saving your time and effort. The best calculator will be interactive as well and allow you to adjust these values based on your own research.
- Cash flow: Cash flow is the king in real estate investing because we all aim for positive cash flow. Otherwise, our income properties are losing money. A rental income property calculator estimates cash flow to give you an idea of how much money you are going to make off your real estate investment.
- Return on investment calculations: Some rental property calculators, like the one offered by Mashvisor, provide real estate investors with important real estate metrics such as cash on cash return on investment and capitalization rate of a rental property. Both are crucial indicators that evaluate the profitability of an investment.
- Investment payback period: The investment payback period is the amount of time it will take for a property to make back the money that was invested into it. An investment calculator will show you how many years it will take for you to get your money back.
Learn more about our rental property calculator.
Mashvisor’s Rental Income Property Calculator: Your One-Stop Shop
Mashvisor offers the best rental property calculator out there. Besides its unique real estate analytics, Mashvisor’s investment property calculator allows real estate investors to make decisions based on specific neighborhood data analysis. Furthermore, it tells you which rental strategy works better for each particular neighborhood. On the property level, Mashvisor’s investment property analyzer supplies estimates of income and expenses of a rental property.
What Does It Calculate?
1- Cash flow
As mentioned earlier, investing in real estate for cash flow should be your primary purpose. Mashvisor’s rental income property calculator does not only provide cash flow estimates but helps you locate positive cash flow properties as well.
2- Cash on cash return
Cash on cash return is the ratio of annual net operating income (before tax) over initial cash invested in the rental property. This important metric allows you to evaluate the profitability of a given rental property. What is a good cash on cash return? Real estate experts recommend going for investment properties with at least 8% CoC return.
Related: Real Estate Investing 101: How to Calculate Cash on Cash Return
3- Cap rate
Cap rate is calculated by dividing the net operating income over the value of the rental property. Note that if a rental property is bought in cash, then cap rate would equal cash on cash return. However, using leverage, real estate investors can aim for a higher return on investment.
Mashvisor’s Rental Property Calculator: Special Features
- Neighborhood analysis
Every real estate investor knows how neighborhood analysis can be a lengthy and daunting task. Thanks to Mashvisor, worry no more. Just enter the name of the neighborhood you want to invest in and filter out your preferences according to budget, property type, CoC return, cap rate and more.
Related: How to Do a Neighborhood Analysis in Real Estate
- Investment property analysis
At the investment property level, Mashvisor’s rental property calculator helps real estate investors choose the optimal rental strategy: traditional vs Airbnb. The Airbnb profit calculator is the investment calculator used to evaluate short term rentals.
Advantages of Using a Rental Income Property Calculator
1- Your time is precious
Using a rental income property calculator saves a lot of time and effort by eliminating the need to manually perform both real estate market analysis and investment property analysis. Naturally, this adds a lot of convenience to the life of a real estate investor.
2- Who doesn’t make mistakes?
Real estate calculations are complex and while doing them by hand, one cannot avoid making mistakes. Using a rental property calculator eliminates this risk. Moreover, it provides accurate estimations based on unique predictive analytics.
3- Your real estate investing guru
A rental income property calculator serves as your real estate mentor. It helps you locate the best neighborhoods as well as choose the optimal rental strategy. What more could you ask for?
Give this unique tool a try! To start your 14-day free trial with Mashvisor and subscribe to our services with a 20% discount after, click here.