Investment Property Calculator
An investment property can be an excellent investment. This calculator is designed to examine the potential return you might receive from an investment property.
Investment Property Calculator Definitions
- Cash Invested
- The cash amount out of pocket required for the purchase of this property.
- Interest Rate
- The amount of interest the investor pays annually to borrow money from the lender. Rates and programs can vary, check with lender for more information.
- Land Value
- The approximate value of the land that the property sits on. Usually available on the tax records in the county the property resides. You can not deprecate land value.
- Personal Property
- Anything that you have that is used for the investment property, such as washer/dryer, range, refrigerator lawn equipment, fixtures and other.
- Personal Property Depreciation Rate
- The rate annually you can depreciate on the personal property.
- Building Value Depreciation Rate
- Recovery period for five-year personal property.
Year Percentage 1 20% 3 14.20% 5 11.52% 2 32% 4 11.52% 6 5.76% - Appreciation
- The amount the property is appreciating on an annual basis. Appreciation occurs on entire value of the property.
- Appreciation
- The rate of return used to calculate the net present value of cash flows.
- Loan P & I
- P=principal, I=interest
- Total Depreciation
- Total amount you can depreciate annually on personal property and building value.
- Gross Operating Income
- The amount of income available after vacancy.
- Property management expense
- Percentage of the “Gross Operating Income” paid for managing the property. This expense is in addition to any other expenses entered in this section.
- Total Annual Operating Expense
- The total annual expenses including real estate tax, repairs, management fees, insurance, utilities, supplies, and other miscellaneous expenses.
- Operating Expense Ratio
- It's the percentage amount- based on the income 23 - 30% is considered average.
- Net Operating Expenses
- Total annual amount of expenses.
- Cash Flow Before Tax
- What's left after expenses, principal payment and interest.
- Annual Debt Service
- Your payment to lender including principal and interest.
- Debt Service Ratio
- The ratio for which the properties annual income exceeds or cover the annual mortgage payment. Also known as the DSCR which is debt service cover ratio.
- Return on Investment w/ out Appreciation
- Cash flow before tax + principal reduction + taxes saved/paid divided by cash invested.
- Cap Rate
- Net operating income divided by price, capitalization rate, rate of return. Over 10% is considered an excellent rate.
- Cash on Cash
- Cash flow before tax % cash invested.