Real estate investment analysis tools can make your life easier as a property investor. This translates directly to a more successful real estate investing career. Whether you intend to use real estate tools to find income properties or to analyze an investment opportunity, it is definitely worth it to explore them. In this blog, we focus on one of the many real estate investment analysis tools, the investment property calculator.
What Is a Real Estate Investment Analysis Tool?
Known also by its other names such as the rental property calculator and Airbnb profit calculator, this real estate investment analysis tool takes real estate investing to a whole new level. Basically, an investment property calculator utilizes data analytics of real estate inputs to perform investment property analysis for a given rental property. For experienced and beginner property investors alike, the real estate investment calculator can be of great value as it significantly reduces the time it takes to evaluate the performance of an investment property. Additionally, using a rental property calculator eliminates the risk of making wrong decisions due to wrong calculations. Related: 8 Must-Have Real Estate Investment Tools
Mashvisor: The Investment Property Calculator You Need
Mashvisor’s own investment property calculator offers much more than investment property analysis. In addition to calculating real estate metrics such as cash flow, cap rate, and cash on cash return, this real estate investment analysis tool has a few extra special features that go beyond the investment property itself. We will talk about these features later on in this article. In addition to investment property analysis, Mashvisor’s rental property calculator can help real estate investors conduct property valuation to determine the value of an investment property. This not only saves your time but also your money. Hiring a professional real estate appraiser to evaluate an investment property can be costly and shouldn’t be done until you are in the process of applying for a mortgage and closing on the deal.
How to Use It
Real estate investment analysis tools are generally easy to use. All you have to do is insert some metrics like the financing method and rental property expenses. Once you insert all the information in the dedicated place, the investment property calculator does its magic.
-
Investment Property Financing
Choosing the investment property financing method is important as a first step when using the rental property calculator. The return on investment calculations provided by the real estate investment analysis tool rely heavily on the amount of cash initially invested. Therefore, the rental property calculator allows you to choose between two financing options: cash or mortgage. If you go with mortgage financing, you are then able to select mortgage duration, down payment, and the interest rate. Changing the values will be immediately reflected in the results given by the investment property calculator.
-
Rental Property Expenses
Based on the area where the rental property is located, the investment property calculator provides predetermined property expenses that match the area’s averages for the same type of investment property. These values can be easily modified if you find the expenses will be different for you upon further research. There are two types of expenses in the rental property calculator: one-time expenses and reoccurring expenses. One-time expenses include inspection costs, repair costs, furniture and appliances, and closing costs. These costs will only occur once. On the other hand, reoccurring expenses include insurance, utilities, property management, maintenance, property tax, rental income tax, and HOA fees.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice using our investment property calculator, click here.
What Does Mashvisor’s Investment Property Calculator Calculate?
Now that you know how this real estate investment analysis tool works, let’s explore what it can calculate.
1- Cap Rate
The cap rate is the ratio you get by dividing the net operating income (NOI) of an investment property by its market value. Calculating cap rate does not take into consideration the financing method. Therefore, if you buy an investment property with cash, its cap rate would be the same as its cash on cash return. It is important to point out that both cap rate and cash on cash return are two types of return on investment calculations, calculated in different methods.
2- Cash on Cash Return
Cash on cash return is another real estate indicator that calculates return on investment based on the initial cash invested in the rental property. Calculating cash on cash return requires dividing the net operating income by the initial cash invested.
3- Cash Flow
Cash flow is the reason why many real estate investors start investing in rental properties in the first place. Calculating cash flow is simply done by subtracting all expenses from the gross rental income. As discussed above, entering accurate one-time and reoccurring expenses in the rental property calculator will give you the exact cash flow to expect from the rental property as the estimated rental income is already provided thanks to predictive analytics. Related: Mashvisor’s Rental Property Calculator: A Guide for Beginner Real Estate Investors
The Special Features
-
Neighborhood Analysis
Neighborhood analysis is one of the special features of this real estate investment analysis tool. What it basically does is provide data at the neighborhood level, which is very useful to carry out a local real estate market analysis.
-
Optimal Rental Strategy
Based on occupancy rate data and return on investment metrics, Mashvisor is able to tell you which rental strategy is most profitable for your investment property. The choice between long-term and short-term rental strategies is simplified with the predictive analytics that this real estate investment analysis tool provides. Related: The Use of Predictive Analytics in Real Estate Investing
Check Out These Real Estate Investment Analysis Tools
In addition to the investment property calculator, Mashvisor offers additional real estate tools that can help you find profitable rental properties. Check out the heatmap analysis tool and our unique property finder and find your next investment property in no time! To start your 14-day free trial with Mashvisor and subscribe to our services with a 20% discount after, click here.