What’s the first think you should do if you are thinking of buying an investment property? Choose the right location? Sure, that’s very important. Choose the best real estate property? Of course, that’s a must. Choose the most profitable rental strategy? No doubt, you can’t do without that. These are all features that make for the best investment property, but how do you make sure to combine them all into one single rental property? By using a rental property calculator! That’s undoubtedly the most important real estate investing tool that is currently on the market and the one without which no real estate investor can thrive. But let’s see how exactly you can use a rental property calculator to get hold of the best investment properties at all times:
Related: How to Use Mashvisor’s Rental Property Calculator
1. Calculate your rental income
When we talk about how to use a rental property calculator, we mean an excellent rental property calculator, like Mashvisor’s. First and foremost, this highly interactive real estate investing tool will provide you with very accurate estimates of the rental income which you can make from any investment property across the US. The forecast is based on analysis of actual rental properties of similar kind in the same location and on traditional and predictive analytics. What does this all mean? Simply that the estimates of the rental income are very accurate, which allows you to plan carefully and diligently when buying a new income property to make sure you choose the best one.
2. Calculate your expenses
To buy the best investment property, you not only need one that will make good money but also one that will cost you relatively little to own, manage, and maintain. Thus, the expenses associated with a rental property is the second crucially important feature which a rental property calculator will provide you with. Mashvisor’s rental property calculator breaks down expenses in two main categories: 1) one-time, start-up costs and 2) recurrent expenses. Both of these are important when analyzing the profitability of your income property and are absolutely needed to buy the best rental property. Once again, the estimates supplied by Mashvisor are based on real estate analytics and are thus highly reliable.
3. Calculate your profitability
Once you have the rental income and the costs of a rental property, you can immediately calculate the expected profitability. Well, not exactly immediately as you will still need some time to make all required calculations if you work by hand. If you use a rental property calculator though, you will have the estimates right away. So, Mashvisor’s rental property calculator will eventually tell you how much you will make from your income property in terms of cash flow, cash on cash return (CoC return), and capitalization rate (cap rate) as well as the expected occupancy rate. After all, the best investment property is the one that makes the most money for you. You should always aim for positive cash flow, for CoC return and cap rate of around or above 10%, and for high occupancy rate (or low vacancy rate, alternatively). Using an investment property calculator will help you select a rental property with all these features to make sure you are a successful real estate investor.
Related: Investment Property Returns Dictionary
4. Show the best rental strategy
If you get a really good rental property calculator like Mashvisor’s, you will be able to tell right away which rental strategy is the best for each and every investment property. An investment property calculator shows the optimal strategy. However, that’s not just a random selection but is based on the expected profitability from traditional and Airbnb renting. That’s a very important piece of information to have for any real estate investor. Even if you buy the best investment property in town and rent it out through the wrong rental strategy, you will not be able to realize its full potential and make as much money as expected. Although Airbnb tends to be the more profitable way of renting properties in most US cities in most cases, you cannot just assume that this will always be so with any investment property. Every time you need to compare the numbers for traditional and Airbnb rental strategy to make sure you are taking the right decision.
5. Eliminate the need for real estate market analysis
We don’t mean to say that you cannot buy profitable investment properties without the use of a rental property calculator. As long as you perform real estate market analysis to get all real estate comps, you should be capable of choosing good rental properties. However, this will take you tons of unnecessary time and energy, and you even risk of losing the opportunity to buy a certain property by the time you arrive at the conclusion that it is the best one for you at the moment. So, another great thing about using a good rental property calculator is that you don’t have to engage in real estate market analysis. Or rather, the calculator will do that for you.
6. Perform investment property analysis
All that we’ve been saying above is that a rental property calculator like Mashvisor’s will do the investment property analysis instead of you, saving you a lot of time, energy, efforts, and money. Instead of wasting time on getting data on rental properties in your location, inputting it into spreadsheets, and making cumbersome calculations, you can use your limited resources to be strategizing about your next move in your real estate investing business. Said in other words – don’t waste your time and money on things that real estate investing tools can do for you.
Related: How To Do Investment Property Analysis
Wondering how real estate investors were succeeding before the time of rental property calculators? Well, eventually it is all about how competitive you are in the market. In the era of high-tech, you simply cannot afford to go the traditional way of spreadsheets and hand calculations. You have to have a rental property calculator. And the better calculator you have, the more profitable your real estate investment choices will be. Thus, waste no more time and head out to Mashvisor’s investment property calculator.