Rental Property Calculator

Using the Rental Property Calculator

The Rental Property Calculator is a valuable tool designed to help you determine the financial feasibility of investing in rental properties. By inputting various parameters, the calculator will provide you with essential details such as monthly mortgage payments, total monthly expenses, and the estimated cash on cash return. Follow these steps to successfully utilize this calculator.

Step 1: Input Basic Property Details

1. Purchase Price ($): Enter the total amount paid for the property. The minimum value accepted is $1000.
2. Down Payment (%): Input the percentage of the purchase price you are paying upfront. It must be between 0% and 100%.
3. Interest Rate (%): Provide the annual interest rate of your mortgage, between 0.01% and 100%.
4. Loan Term (Years): Specify the duration of the mortgage in years, which should be between 1 and 30 years.

Step 2: Enter Rental Income and Expenses

1. Monthly Rent ($): Enter the amount of rent you expect to receive every month.
2. Annual Property Tax ($): Provide the total amount paid annually in property taxes.
3. Annual Insurance ($): Enter the yearly cost of insuring the property.
4. Monthly Maintenance ($): Specify the regular monthly maintenance costs anticipated for property upkeep.
5. Vacancy Rate (%): Enter an estimated percentage representing the anticipated vacancy rate.
6. Property Management Fee (%): If you have a property manager, input the percentage of rent they charge.

Step 3: Review the Results

Once the required information has been entered, the calculator will process the data and provide the following results:

• Loan Amount: The total loan amount, calculated based on the purchase price and down payment.
• Monthly Mortgage Payment: The estimated amount paid monthly on the mortgage.
• Monthly Property Tax, Insurance, Maintenance, and Management Fee: These fields break down the individual costs associated with the property on a monthly basis.
• Total Monthly Expenses: Includes all monthly costs such as mortgage, taxes, insurance, vacancies, and management fees.
• Monthly Net Income: Calculated by subtracting total monthly expenses from the monthly rent.
• Annual Net Income: The annualized version of the monthly net income.
• Cash on Cash Return (%): Represents the return on the actual investment, or cash, you have invested into the property.
• Cap Rate (%): The capitalization rate, which indicates the return on the property based on its purchase price.

This structured approach aids in evaluating the investment potential of a rental property, ensuring an informed financial decision-making process.