In the 21st century we have seen so many breakthroughs in almost all investment fields. Ways that make it easier for customers, sellers, and all third parties to become involved in an investing market, all done online by the click of a button. Before the existence of a rental property calculator, real estate investors had to do a lot of research and collect a lot of data to make a proper comparison or investment property analysis of the investment they were considering to undertake. A rental property calculator is a tool that makes spreadsheets and data collection turn into wasted time and effort for potential investors.
What’s a Rental Property Calculator?
A rental property calculator, also known as an investment property calculator, is an application or a real estate investing tool that can be used online to get real estate market analysis, neighborhood insight, and comparisons between different investment properties. Mashvisor’s interactive rental property calculator does exactly that and even more. Using analytics of the market and data, it calculates costs and profits of any investment property that is listed on the website. The interactive page on Mashvisor allows the user to insert the numbers they want based on their budget and expectations to calculate the results of the financial analysis.
To put into further details, Mashvisor’s rental property calculator provides analysis at two different levels: the property and the neighborhood level. This is what real estate investors should be looking for; the type of detailed analysis makes decision-making a lot easier when comparing neighborhoods and various properties.
What Does Mashvisor’s Rental Property Calculator Calculate?
- Positive/Negative Cash Flow: Cash flow is basically the difference between the monthly rental income and the monthly expenses of a rental property. Having negative cash flow means that the real estate investment is a bad one, because the expenses exceed the profits. Mashvisor’s rental property calculator gives potential and existing real estate investors cash flow details after all the numbers have been added.
- Capitalization Rate: The cap rate is the ratio of the net operating income over the property asset value. For example, if the NOI is $10,000, and the property value is $100,000, the cap rate would be 10%. If the cap rate is below 10%, it is advised to not invest in that income property.
- Cash on Cash Return: The cash on cash return equals the NOI over the total cash investment, which means that you can differentiate between whether you paid for your investment property all in cash or with a loan. Experts recommend going for investments with cash on cash return of at least 8% to assure good profitability.
Related: Why an Investment Property Calculator Is Better Than Spreadsheets
Features of Mashvisor’s Rental Property Calculator
Neighborhood Analysis
Mashvisor’s search map makes it easy for users to find investment properties in any area they want to invest in. The search gives you an overall map view of a certain city with names of neighborhoods and a general overview of the best ones. Using the rental property calculator filter allows the user to have a view on which neighborhood is a better investment based on different categories. The data that can be used to compare neighborhoods in general includes the listing price, the Airbnb and traditional cash on cash return, the Airbnb and traditional rental income, and the Airbnb occupancy rate. Selecting any one of them would give each neighborhood a color, which refers to a scale meter on the bottom of the screen.
After selecting a particular neighborhood, the rental property calculator becomes more detailed. The details for every neighborhood will include average property price, average square foot price, cash on cash return, average rental income, and cap rate. These numbers are the most important data that a potential real estate investor will need to make an informed decision about a certain neighborhood, to understand its profitability and its risks. However, unlike any other rental property calculator, Mashvisor’s additional features will give investors more insight of the neighborhood.
Related: Looking into the Future Using an Interactive Investment Property Calculator
Unique Features of Mashvisor’s Rental Property Calculator
- Optimal Strategy: Based on the date collected, Mashvisor gives its users the best strategy to follow in a certain neighborhood when it comes to rentals. The strategies are Airbnb or traditional rentals.
- Optimal Property Type: If an investor is confused about which type of property is more profitable in a certain neighborhood, then Mashvisor’s rental property calculator has the answer. The feature gives an indication of the most profitable type of property, such as a condo, an apartment, or a single-family home amongst others.
- Mashmeter: The Mashmeter is one of the best tools available on Mashvisor. It simply tells investors how good or bad investing in a particular neighborhood is. The score expressed as a percentage is based on quantitative and qualitative data collected.
- Optimal Number of Bedrooms: An additional feature gives an indication of the most profitable number of rooms that an investor should aim for in a certain neighborhood.
Rental Property Analysis
After choosing the right neighborhood for your investment property, the next step would be using the rental property calculator to find the best property in that area. The basic concept is that it narrows down your search criteria in a certain neighborhood by giving you the optimal strategy and the optimal property type. Finding a rental property that fits that criteria won’t be very difficult. After selecting a preferred property, the interactive feature of Mashivor’s rental property calculator comes to life.
The analysis will initially provide investors with rental strategy comparisons for both Airbnb and traditional rentals. The comparison criteria include rental income (which can be edited), monthly expenses, cash flow, CoC return, cap rate, and occupancy rate. This comparison makes it easier for real estate investors to understand why and how a certain strategy is better for that property by showing the numbers.
The second part to look at is the financing/mortgage section of the rental property calculator. That section allows the user to choose the financing method for that property, either mortgage or cash. Selecting the mortgage option allow the investor to adjust the down payment, the loan amount, the loan type, and the interest rate, which gives real estate investors a better understanding of future cash flow depending on the mortgage details.
The third part of the rental property calculator deals with the expenses of the rental property. The expenses are divided into two parts: one time costs and recurring costs both of which can be edited easily. The one time costs include inspections, repairs, furnishing, and any other first time cost the user wants to add to the list. Recurring costs are those that are most common in all rental properties, such as insurance, utilities, property management, property tax, and any customized expense that the user wants to add. The ability to edit these expenses and recalculate present and future financials of the investment is a great tool for real estate investors. For example, a rental property owner who is not paying utilities because tenants do that has the opportunity to eliminate that expense and see the change of the return on that investment in the 5th or 6th year.
Related: Why You Should Consult a Rental Property Calculator First
Conclusion
Mashvisor’s rental property calculator is the future of real estate investing. This interactive real estate investing tool allows you to utilize all data provided to find the best rental property based on your preference and financial situation. It gives you the ability to become your own realtor, accountant, and financier with a click of a button. If you want to grasp the future of real estate, then the next step is becoming a user of Mashvisor.