Real Estate Investment Property Calculator
This real estate calculator makes the number crunching easy on your investment property. It will help you sort a good deal from bad by providing the key operating ratios including: DSCR (Debt Service Coverage Ratio), NOI (Net Operating Income), NIM (Net Income Multiplier), CAP (Capitalization Ratio), and more.
It also includes a handy calculator in the help-sidebar for adding up numbers as you input the necessary data. Just click the "show calc" button to make it appear.
Alternatively, if you are looking for help with real estate mortgage calculations or payment analysis please see our complete suite of mortgage calculators here.
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How To Pick A Great Real Estate Investment Property
Real estate can be an excellent investment – if you know what you’re doing.
But how do you know if you’re getting a good deal? Will you make money on your investment? Will your estimate for expenses and income work out?
This real estate calculator will help you answer these questions… and more.
The reality is your investment property profits are driven by the math behind the deal, which can be complicated. There are a lot of numbers and ratios to consider. This investment property calculator makes the math easy so you can focus on negotiating and operating your property portfolio rather than analyzing it.
Below is more information about how real estate investment works so you can maximize your results.
The Goal Of Investment Properties
When you start acquiring properties for investment purposes, your ultimate goal is to earn a profit – both through cash flow and appreciation. These are the two main components of your return on investment equation (tax considerations being a third).
The number to focus on is positive cash flow because it makes investment property ownership a joy to get paid at the same time you grow equity; whereas, it is a pain when you have to feed your real estate due to negative cash flow.
Ultimately, your ROI equation will be dominated by the gain or loss from the changing value of your real estate, but your peace of mind while owning the real estate will be determined by whether it is positive or negative cash flow.
Additionally, you should try to pick investment properties that don’t require much maintenance. The reason is because you have only two resources – money and time – and the only one that is truly limited is time. You can’t make more of it.
What that means is the last thing you want is to spend all your valuable time improving and maintaining properties. Even if the property doesn’t require much money, remember: time is ultimately more valuable because it is limited – you can’t make more of it.
In summary, always keep in mind the reality of ownership before buying. There is much more to real estate than just numbers. For example, positive cash flow gives you an infinite holding period and makes ownership a joy, but that number will be overshadowed by gain or loss in market value dominating your return on investment equation even thought it has little effect on how you feel about ownership month to month.
Similarly, maintenance problems might not seem a problem when you are excited to gain control over a property, but the ongoing headaches can severely impact how you feel about ownership.
How To Make Money From Investing In Real Estate
So how do you build wealth through real estate investing?
Let’s look closer at the various sources of return that will be revealed when working with this real estate calculator.
How To Buy Real Estate Properties
There are several ways to finance your real estate purchase. You can take loans against your existing property or take a regular mortgage loan.
For those who are already experts in real estate investing, they can consider hard money loans. Hard money loans are easier to get because they are not based on the credit worthiness of the borrower. Instead, they are based on the value of the property. But beware – hard money loans can be expensive turning a marginal property into a loser.
Begin your investment process by considering the following steps:
Investing in real estate is not for everyone. It is part business and part investment.
Your investment return is a function of buying it right and financing it right. Your business return is a function of managing it right.
Real estate investing is not a get-rich-quick scheme and it can take decades before you see results. Educate yourself and invest wisely!
Real Estate Calculator Terms & Definitions
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