Buying an investment property is the best investment you can make. However, that does not mean real estate investors can just buy any income property for sale and expect it to start making money. This fact, then, raises questions like:
- How to know if an investment property is profitable?
- How to calculate the rate of return on an investment property?
Both questions have the same 6-word answer: Use an investment property return calculator!
What is an investment property return calculator? Where can you find the best calculator for finding and analyzing a residential property today? Read this blog to find out!
What Is an Investment Property Return Calculator?
Also known as a rental property calculator or real estate investment calculator, the investment property return calculator is the best tool for real estate investing. It’s the ultimate analysis tool for income property for sale. The calculator is powered by various types of real estate data. Through such data, investors can learn about the return on investment of a rental property.
What Is the Best Investment Property Return Calculator Today?
Rental property calculators have revolutionized real estate investing. No longer do investors depend on a real estate investment analysis spreadsheet. However, no two calculators are the same. So, where can you find the best rental property return on investment calculator? Right here, with Mashvisor! Why is Mashvisor’s calculator the best for you? We’ll tell you! We’ll also show you if you CLICK HERE! By doing so, you can start your FREE 14-day trial with our calculator.
How Does Mashvisor’s Rental Property Calculator Work?
Mashvisor’s rental property calculator uses the most up-to-date data and trends for its analysis. It also allows real estate investors to provide input data to generate the most accurate results. Then, the investment property return calculator computes the return on investment (ROI) metrics for the property.
Mashvisor’s Input Data
Input data breaks down into two types. First, real estate investors can enter in financing costs. They can also adjust and add any additional rental property expenses. These two figures are ultimately deducted from the rental property’s profit to calculate ROI.
-
Financing Costs
Calculating return on investment, specifically the cash on cash return, greatly depends on financing costs. Mashvisor’s calculator allows users to select the financing method (cash or mortgage) that they plan to use. For mortgages, real estate investors must insert the amount of the down payment, interest rate, and loan amount. Investors must also include the loan type. With financing costs ready to go, the calculator is one step closer to rental ROI calculation.
Mashvisor’s Investment Property Return Calculator – Financing
-
Property Expenses
The investment property return calculator actually provides expense estimates based on real estate comps and location. Rental property expenses include one-time startup and recurring costs. Startup costs are only paid once. These include furnishing costs, closing costs, and inspection fees. Recurring costs, however, persist during rental activity. These include HOA dues, income tax, insurance, and more. You can either keep the estimates as they are or adjust them and add your own.
Mashvisor’s Investment Property Return Calculator – Expenses
Mashvisor’s Output Data
Once the input data is inserted, rental property ROI is calculated. The calculator measures ROI in three ways. These include cash flow, cash on cash return, and cap rate.
-
Cash Flow
Cash flow is the most essential ROI metric out there. It is defined as the difference between rental income and expenses. A positive cash flow rental property has a net positive income. A negative cash flow property, however, is an unprofitable investment. Mashvisor’s calculator provides cash flow estimates for all investment properties for sale.
-
Cash on Cash Return
Cash on cash return, or CoC return, is a valuable ROI metric in real estate. Using cash flow, it estimates return based on the amount of cash invested. For this reason, the CoC return is a great investment property rate of return metric for investors using a mortgage.
-
Cap Rate
Capitalization rate, or cap rate for short, is the third ROI metric computed by the calculator. Unlike cash on cash return, it evaluates profitability regardless of a property’s financing. Therefore, the cap rate is best used for comparison.
Why Is Mashvisor’s Calculator So Unique?
Mashvisor’s calculator not only provides the most accurate and comprehensive ROI analysis out there, it also provides unique real estate data. Some of the unique features of Mashvisor’s investment property return calculator include:
-
Optimal Rental Strategy
Choosing between a long-term investment property and an Airbnb investment property can be tough. However, with Mashvisor’s calculator, real estate investors can accurately determine which rental strategy is optimal. The calculator does so by providing both traditional and Airbnb data. It acts as a rental property calculator and an Airbnb calculator. Using data and trends, the calculator tells the investor which rental strategy to follow.
Mashvisor’s Investment Property Return Calculator – Rental Strategy
-
Real Estate Comps
When buying an investment property, investors need to compare it with other properties to determine its value. These are called real estate comps and you can easily find them with Mashvisor’s investment property return calculator! Mashvisor’s interactive calculator automatically lists the best real estate comps for analysis for every property on the platform. And as you would expect, this tool provides real estate comps for both traditional and Airbnb rentals.
Mashvisor’s Investment Property Return Calculator – Comps
-
Investment Payback Balance
The calculator also provides a payback balance for an investment property. In this section, users can learn about the 10-year profit forecast of a property based on its current data. The payback balance is estimated for both Airbnb and traditional investment properties. Investors can, therefore, use the tool to understand how to maximize rental profitability.
Mashvisor’s Investment Property Return Calculator – Investment Payback Balance
Mashvisor’s investment property return calculator is a must-have tool for investing any time. To learn more about Mashvisor’s real estate investment tools, CLICK HERE!
To get access to our real estate investment tools, click here to sign up for a 7-day free trial of Mashvisor today and enjoy 15% off for life.