Investment Property CalculatorAn investment property can be an excellent investment. This calculator is designed to examine the potential return you might receive from an investment property.
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 amount of expenses including real estate tax, repairs, management fees, insurance, utilities, supplies, other misc.
- 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.
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