If you find yourself always searching for information about real estate investing and that road led you to here, you came knocking at the right door, my friend! Keep in mind that investing in real estate is not an easy goal to achieve. Real estate investors spend months trying to find the next best investment opportunity. Alternatively, you can cut to the chase and use an investment property calculator as your guiding star!
Of course, an investment property calculator is not obligatory for real estate investors by any means. However, it can make things a whole lot easier and precise. After all, do you want to be precise with your investments or just wing it as you go?! It always remains true that no one wants to gamble with their investment opportunities. You want to dive into an investment field well aware of anything that may happen along the way.
Investment property calculator defined
An investment property calculator basically tells you whether you should invest in any said property or not. It sure makes things a whole lot easier for real estate investors! It’s an online tool that uses data and mashes it together to give you the possible outcomes of any investment opportunity through figure calculations. As a real estate investor, expect to know the expenses of any possible real estate investment through calculations of overall expenses and profits generated by it.
What to expect when using an investment property calculator
Firstly, to give you a hint of what an investment property calculator can offer you, we’re going to dive deeper into the components of Mashvisor’s investment property calculator. Let’s assume you’re using Mashvisor to run an analysis on a property, expect to see the following figures:
Return on Investment
The Return on Investment figure is also known as (ROI). It is the ratio between the initial cash investment that you’ve put in a property and the rental income generated through it. In any case, the ROI figure is calculated annually to give you a hint of how worthy an investment is. To learn more about it, this blog post might be useful for you: What Rental Property Return on Investment Can You Expect?
Net Operating Income
Mashvisor’s investment property calculator calculates the smallest things for you, leaving no space for error. The net operating income is the difference between the annual rental income and the annual expenses on any said property.
Cash on Cash Return
The Cash on Cash Return measures the Net Operating Income of the property over the cash investment. Moreover, this measuring tool is a must for real estate investors who are wondering whether to pay in cash or mortgage. Definitely, a useful one to know.
The Capitalization Rate
Often referred to as the Cap Rate. Above all, the Cap Rate is another indication of the return on investment. It references the property’s value to the net operating income. For instance, if an investment property’s purchase price was $600,000 and the net operating income $45,000, then the cap rate is 7.5%.
Cash Flow
Cash flow is an important indicator of the health of the potential investment property. A real estate investor is always warned to stay away from negative cash flow investment properties. On the other hand, positive cash flow investment properties can give you reassurance that you won’t be reaching into your own pocket to cover expenses. Meanwhile, if you’ve found a property that you’re interested in and realized it’s a negative cash flow investment property, read this: How to Make Any Real Estate Property into a Positive Cash Flow Investment Property.
Why you should invest in an investment property calculator
Accuracy
An investment property calculator is an application of real estate data in a platform. As a result, this data is everchanging and constantly updated along with real market data. For this reason, you can never get the same accuracy with obsolete methods like spreadsheets.
Takes more variables into account
Through spreadsheets and other methods of basic property analysis, you can measure a property’s performance on limited points of view. On the contrary to an investment property calculator, you can measure a property’s performance through a real estate market analysis that takes location, city, and even neighborhood into account. With Mashvisor’s investment property analysis, this is a piece of cake! You can specify different variables to measure any property on and view them as you go.
Time efficiency
Conducting a real estate market analysis is nothing new to real estate investors. The only thing that’s new is automating the procedure through technology. Ah, the sweet computerized intelligence of a modern-day investment property calculator. Real estate investors no longer have to go through the lengthy and rigid process of looking at different spreadsheets and trying to make sense of it all. Check out this blog post to get an idea of what a real estate market analysis can do for you: The Real Estate Market Analysis Tools That Every Investor Needs.
Property finder feature
With Mashvisor’s investment property calculator, real estate investors can make use of a valuable feature called the property finder feature. This feature revolutionizes your property search, ultimately guaranteeing you’ll be making money in real estate. Pretty neat, right? In any case, you can specify budget/property price, number of bedrooms, bathrooms, etc. This feature returns the investment properties with the highest potential for making money.
That being said, using an investment property calculator is what to expect from modern day technology’s effect on real estate investing. You can predict how your investments will do and stop gambling with your future. Many real estate investors and home buyers are making use of this, and you can too. Click here to make use of the 7-day free trial with Mashvisor’s investment property calculator and dip your toes into possible investments before diving all the way in.