Investment Property Calculator

Investment property can be great way in increase your net worth. This investment property calculator will provide and analyze the potential return you might receive from an investment property.

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Definitions

Cash Invested

The money, you the investor, actually have to put down on the property. (out of pocket). Usually it is the amount of earnest money you invest in 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 on an annual basis appreciation occurs on entire value of the property
Loan P & I: P=principle, 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.
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, principle payment and interest.
Annual Debt Service: Your payment to lender including principal and interest.
Equal Principle Reduction: The amount left annually as you pay down the principle and interest.
Return on Investment w/appreciation: Cash flow before tax + principle reduction + taxes saved/paid + appreciation divided by cash invested. Includes appreciation.
Return on Investment w/ out Appreciation: Does include same formula above except appreciation.
Cap Rate: AKA= Net operating income divided by price, capitalization rate, rate of return- Anything in Double Digits is Fantastic!
Cash on Cash: Cash flow before tax % cash invested.
Investment Appreciation: Annual Percentage of increase of appreciation of property.
Total Return: The total analyzation of returns of the property.

Using an Investment Property Calculator

Investment property calculator is a software utility that can be used to calculate the income, expenditures, and liabilities concerning an investment property. One can easily input various kinds of data about the property through some easy-to-navigate and simple software.

Uses of Investment Property Calculator

The main use of the software is in calculating the exact income and expenditure with an investment property. If you are well-versed with the nuances of real estate and financial planning, you might be able to calculate the exact value of the property or the income produced from the property after a certain period. However, if you are one among those who have no knowledge of the tricks of real estate investment, your calculations can go wrong.

It is nearly impossible for you to calculate the exact profit or loss after considering the interest rate of the loan, depreciation or appreciation of the property, and increase or decrease in the revenue produced from the property. This is where the investment property calculator software can be of great help. It not only provides accurate financial reports, but also gives a pictorial representation using graphs to show the increase (or decrease, as the case may be) of your investment.

How to Use It

The accuracy of the reports generated by the software depends on the exactness of the data provided by you. As an oft-repeated adage about the software industry indicates, garbage in invariably results in garbage out. Therefore, one must clearly understand the value of the data to be entered in a particular field.

To begin with, one has to enter the overall value of the property and the money one has paid out of one's own pocket to the investment property calculator software. Then the details of the loan taken for the purpose should be input. It must include details such as loan amount, period of loan, and interest rate. One must also provide details of the property such as the place and details of additional features, if any, of the property. In addition, one has to produce expenses associated with the property such as taxes and maintenance expenditures. One must also provide the percentage of depreciation or appreciation of property prices.

Once this data is fed, the investment property calculator software will do the calculations and provide you a report on the likely annual financial returns or liabilities accrued from the property.