To reach success in today’s real estate, you have to embrace the use of technology. One of the best tools technology gives to real estate investors is a rental investment calculator. This online tool helps you calculate different metrics to find out the return on rental property investment. This tool gives aspiring investors the chance to decide on whether buying a property will be a smart investment decision or not in a few minutes. A rental investment calculator has many uses, making it a must-have for every real estate investor. Before buying a rental investment calculator, here are some things to consider:
Does the Calculator Have Tools that Will Help You to Find Investment Properties?
There are many types of rental investment calculators online now, but most of these calculators assume that an investor has already found a property. These online tools will then ask you to enter your property’s information and then calculate the return on investment for you. These calculators work like the spreadsheet of excel rental property analysis, the only difference between the two is, in these calculators, you don’t have to insert any formula related to buying a rental property.
You might finish spending your time looking for an excellent rental property, maybe working with an agent. Still, once you enter the property’s information in this calculator, you’ll find out that your investment property will not bring profit; instead, it will be eating your cash every month.
Instead of allowing such to happen to you, look for an all in one rental investment calculator. This calculator will enable you to conduct a rental investment property search and rental property analysis, all this from the comfort of your room. That way, you get to save time, energy, and money.
Are the Rental Income, Occupancy Rate Estimates, and Costs Ready to Go?
As mentioned earlier, when using most rental investment calculators, you’ll have to plug in the amount of rental income an investment property will produce, as they expect you to know all the occupancy fees and the rental property expenses.
Though most real estate investors buy rental properties from homeowners or other investors, some buy their rental properties from landlords. However, these landlords don’t usually provide their buyers with information about the rental income, costs, and occupancy rates. So, where would an investor get this information?
You’ll have to spend time researching the real estate market & make an analysis in the neighborhood to find how much other investors with similar rental properties are spending and earning. And you’ll have to think about how often your property will be occupied based on the area and the real estate market.
But once you insert this information into your rental investment calculator, you’ll find out that the property’s cash flow is negative.
To avoid this, when buying a rental property calculator, look for the one that can collect real estate data and analyze it for you, one that can display costs, occupancy rate estimates, and rental income. A calculator that’s worth buying is the one that can calculate rental property expense, rental income, and occupancy rate.
Features that Allow you to Calculate ROI and Mortgages on a Rental Property
Knowing your property’s estimates is great; this means your rental property calculator will show you the occupancy rate, the cap rate, and the cash flow. But what about the cash on cash (COC) return? The return ratio rate, which calculated the net cash earned on the invested net cash, is the cash on cash return. It’s unique to each investor and depends on your investment property financing. Cash on cash return lets you know how much money you’ll be making based on the amount you spend when purchasing the property.
The right rental investment calculator has an interactive mortgage calculator that can add your interest rate, amount of loan, down payments, and property price.
Real Estate Comps of the Property for Sale
When buying a rental property calculator, look for the one that auto-generates real estate comps. It is crucial to perform a cooperative market analysis as it allows you to eject the overpriced and know the below-market opportunities. An excellent way to find real estate comps is using a rental property calculator as it will provide comparables for every real estate listing in a unique way.
Airbnb and Traditional Analytics
As an investor, you have many options for renting out a property; you can either use the Airbnb rental method or the traditional rental method. A smart investor will look into both strategies and choose the one that will bring more money. When buying a rental property calculator, buy the one that provides analytics of both rental methods. As it will allow you to compare the return you’ll achieve from each strategy quickly, giving you the chance to choose the best strategy that suits your preference.
Ability to Estimate ROI on a Rental Property
When buying a rental property, you’ll want to know how the property will perform in the next few years, especially if you plan to implement a buy and hold real estate investment method. You’ll like to know if the property will generate profit or loss based on its current stats.
Most first-time real estate investors make the mistake of ignoring this aspect and focusing on the cash flow the property will produce in a year as it is the kind of information that most rental property investment calculators provide. Look for a rental property calculator that can forecast ROI based on predictive analysis and let you know your investment payback balance.
Choosing a good rental investment calculator can be overwhelming, but with the simple guide above, you can choose the best calculator that suits your preference. It’s crucial to note that the right rental property calculator will enable you to calculate the rental property analysis, the average cap rate, the average cash on cash (COC), Airbnb or traditional occupancy rate, depending on the strategy you choose. It will also enable you to find your property’s average rental income, the monthly expenses, and the investment payback balance your rental property will likely bring.