Real estate investors might differ in capital, types of investments, and long-term vision. On the other hand, there are a few pillars that every rental property investor must know about, and a rental property calculator is among these pillars. Yes, you might luck out and have a real estate investment success without one, but to what extent do you wish to risk your real estate investment career?
Rental Property Calculator: Defined
A rental property calculator is a digital tool that real estate investors can use to find out the many details of any potential investment property. Moreover, it keeps the real estate investors at an advantage by allowing them to forecast the return on investment ratio of their potential investment property. A rental property calculator is offered by many online websites and platforms online to make your job as a property investor a little bit easier.
What Is a Rental Property Calculator Made Of?
A rental property calculator is made to aid you in every step of the way with any rental property investment. Additionally, it acts as a guiding post for whichever investment strategy you choose. In fact, it goes deeply into debating different investment strategies on your behalf.
The make-up of a rental property calculator:
- Property financing details
- Costs and expenses of the potential investment property
- Forecasted return on investment figures such as cash on cash return, capitalization rate, and even rental income
These three categories sum up the heavy lifting that a rental property calculator can do for you. You can rely on the information provided when going for a rental property as a real estate investment. A rental property calculator can sum up research that can take you weeks in a matter of a few minutes. It makes perfect sense to opt for a fast-technological solution when it’s available.
Whether you’re thinking of buying an investment property as a rental property or a vacation home, you’ll find the three key ingredients in a rental property calculator useful enough to keep pursuing. They are detailed as follows:
Property financing
With every possible real estate investment property, financing can make or break a deal. Whether you’re going to pay in cash or go for mortgaging, you must study all aspects of a financing method to ensure you’re generating enough cash flow through the property to cover costs, mortgage and then some.
For the lucky few real estate investors, they can use cash to pay for the property. Meanwhile, you won’t have to go through interest rates or mortgaging. In any case of cash payment, the cash amount will be similar to the property’s purchase price. However, if you’re going for mortgaging, a rental property calculator gives you a list of alternatives and variables to choose from. These variables often include mortgage types, mortgage duration, down payments, and most importantly, interest rates. For more information on property financing, read this: Investment Property Financing: What Are the Best Options for Real Estate Investors?
Property expenses
With property expenses, it makes sense that you do your own research to get the most accurate information related to your potential investment property. The more information you gather, the more accurate your calculations are. While calculating expenses and costs for running an investment property may not be the most attractive part of real estate investing, it’s a must to ensure the longevity and profitability of your investment. Additionally, the costs and expenses of a rental property play a major role in affecting your return on investment fluctuations. If you lower the costs, it only makes sense that your return on investment ratio will be higher.
To be precise, property expenses include any payments that you’ll have to endure from the beginning of your ownership and payments that will stay constant along with that ownership. That often includes maintenance costs, taxes, management fees if applicable, HOA fees, or any other expense that the real estate investor will have to pay for.
Forecasted figures
The property financing and expenses lead you to the most important part of an investment’s life, the return on investment. Through using the financing expenses and mortgage payments, and factoring in the expenses, both start-up and recurring costs, you can reach the final tally of return on investment figures that you need.
These figures often include the following:
- Cash on cash return
- Capitalization rate
- Rental income
- Occupancy rate
Whether you’re an expert real estate investor or a novice one, you will find a rental property calculator of major use.
Mashvisor’s Rental Property Calculator
Mashvisor offers a variety of solutions to property investors. A highly encompassing rental property calculator makes for the best solution to use when opting for rental property as an investment. Through it, a real estate investor can decide whether to go for an Airbnb rental strategy or a traditional rental strategy. In fact, it goes so deeply into both rental strategies to find the optimal rental strategy for your investment property.
Meanwhile, Mashvisor’s rental property calculator acts as a real estate investment tool that delivers. It calculates return on investment, cap rate, and even the occupancy rate of any said neighborhood. This all comes together for the sole purpose of guiding you to the best investment property that fits both your personal and professional needs. Click here to make use of the 14-day free trial offered by Mashvisor.
Related: How to Use Mashvisor’s Rental Property Calculator.
Can You Go Without a Rental Property Calculator?
Simply put, yes! You can. A rental property calculator is by no means an obligatory tool for real estate investors. It simply works to focus your attention on properties with the highest return on investment and capitalization rate. In fact, do you really want to be the investor who is winging it and relying on luck? I think not. Read this blog post to learn why you need a rental property calculator at the beginning of any property investment: Why You Should Consult a Rental Property Calculator First.
To Conclude,
The usage of investment property calculators and rental property calculators is becoming the norm in real estate investing. In fact, for any given investment market, there are such measuring tools to help guide you through. Make sure to prepare a toolkit for real estate investing, and a rental property calculator should be within it.
If you have more insights about rental property calculators, please feel free to share them with us in the comments section.