The Ultimate Rental Property Calculator
The search for a perfect home is never-ending. One has to look for the budget, location, requirements, and land positioning to make sure the selection provides nonmaterialistic returns.
We are luckily living in an era where several websites are helping people reduce the number of hassles associated with finding a rental space. You can find beautiful homes with only a click of a button and ask for a house tour also. Luckily, some rental income calculator platforms help tenants know the rent based on the current market price value.
While inspecting, we found that the only drawback these calculators have is the complicated access. This means, one has to know certain values and calculate them to access the actual rent estimate. Let us modify the rental income calculator in easy-to-access terms and make the process quick.
Necessary Information for Calculating Several Amounts
1. Purchase Information
You will get to know the rent estimate using the web version of the calculators. But there are certain amounts which you would need beforehand.
· Purchase Price – the price at which you buy the property
· Down payment – the first payment you make for the purchase
· Mortgage period - the time limit to pay the loan
· Interest rate
All these values will give you the required mortgage amount and the mortgage payment you need to make to own the property.
2. Rent Estimation from the Property
Now, for the rent estimate calculation you need the following:
· Rental amount – the amount you wish to put on your property for the rent
· Rental expenses (fixed) – the exact amount spent on property tax, house insurance, monthly utilities, etc
· Rental Expenses II – the capital expense as per the vacancy rate, along with the cost for property maintenance, management
The amount you get now summons your total expense on the property for rental purposes. This amount must be much always lesser than the mortgage amount.
3. Net Returns from the Property
Your Monthly Cash flow, NOI (Net Operating Income), and Cap Rate along with the cash on cash return will determine the cash you need. This amount will be 4-5 times lesser than the mortgage amount.
Some rental income calculator provides the total mortgage cost and the calculation on the total interest you have paid to date. Make sure to enter every amount correctly and find the accurate calculation.
Advantages of a rental property calculator
The rental property calculator is a wise place to check the return value of the property you are about to invest in. If the result shows good return values, you are opting for a rich asset.
If you are interested in deep-dive on a property, there are some advanced features that a rental property calculator shows. Some of them are the gross rent multiplier, the income to expense ratio, projected income, different expenses, and the ratio of debt coverage. These advanced calculators also allow the user to add additional income sources, the lease money by parts.
A general Guideline to Real Estate Investment
Houses look great until you have to perform plenty of calculations, and add profit numbers to them. It can be a little tedious for new users. But the booming real estate market is attracting investors each day. However, following some general principles, you can quickly analyze the type of investment you are making.
The 50% Rule
The total amount that operates on the property is 50% of the net income. This is the operating expense that excludes the mortgage interest or payment. you can use the other 50% of the net income in paying the monthly mortgage payment.
The 70% Rule
This is for the senior investors of the real estate market. the 70% rule applies when you purchase a distressed property and flip it to make a certain profit. the percent amount denotes that the price you pay must be less than the 70% price of the after repair value and the repairing cost.
The 1% rule
After you finish repairing your property, you must have 1% or more gross monthly income in hand. This percentage is the bare minimum. If you are very good at understanding real estate, you can also follow the 2%, 3%, or 4% rule. The higher the % the better it is done.
