Investment Property Calculator
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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.