Are you a new investor and wondering if there’s a tool that will help determine if a property will make a great investment opportunity? Well, you’re in luck. We have every investor’s best friend – the investment property calculator.  

You might ask, what about spreadsheets? Well, unless you intend to spend a considerable amount of time working the spreadsheet, you can simply use an investment property calculator, which offers you a quicker result. 

More so, you can effortlessly compare various investment properties simultaneously. What’s more? A rental property calculator saves effort and time while providing you with considerably precise results. Fascinated? Keep reading to discover more details about the rental property calculator

What’s an Investment Property Calculator?

A rental real estate property calculator is simply an investing tool helping investors perform real estate analysis. This tool simplifies the investment property analysis process. It saves lots of time and effort because you don’t have to collect the data, and manually enter it into the spreadsheet before analyzing it. 

The rental investment property calculator does all the work. Besides calculating the numbers, the investment property calculator helps you discover whether a specific real estate property is a viable investment option. A great rental investment property calculator must include the following:

  • Financing Method

A good property calculator should include a financing method in its calculations to get the most relevant and accurate results. As a real estate investor, you can either set the rental investment property calculator to mortgage or cash, depending on the financing method you’re using. 

Most property investment calculators include features that allow them to calculate a mortgage interest rate based on its duration and type while having its interest rate and payments as expenses. 

  • Expenses

A great rental property cash flow calculator will include various expenses that the house might have to help you calculate the property’s return on investment (ROI).

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The expenses you’ll need to calculate are in two categories: 

First-Time Startup Costs

  1. Repairs and Renovations
  2. Insurance
  3. Utilities
  4. Inspection costs
  5. Furniture and Appliances
  6. Closing costs
  7. Recurring Expenses

Property Maintenance

  1. Property Tax
  2. Professional Property Management
  3. Rental Income Tax
  4. HOA fees

Nevertheless, a great rental property calculator should include other sections that allow the real estate investor to add extra or special expenses. Furthermore, it should also customize and modify the available ones to give you the most accurate results. 

  • The Return on Investment

The rental property calculator’s primary purpose is to calculate the property’s return on investment. To achieve this, it’ll take all the various expenses and subtract them from the generated profits. 

While a rental property’s main profits are from the rental income, some properties have additional amenities that generate more cash for the investor, such as paid parking lots and washing machines. 

Thus, the rental property investment calculator should allow the investor to add all the rental property’s income sources to get the proper return on investment. 

Pros and Cons of Using an Investment Property Calculator

Like other real estate investing tools, the property investment calculator has its pros and cons. However, its benefits outweigh its disadvantages. Some of them include:

  1. Easy Access

The real estate investment calculator is easily accessible from mobile devices. This easy access is highly convenient, seeing as you don’t have to carry multiple spreadsheets or remember numbers. You only need to click on the tool and access the data you require for future real estate investing. 

  1. Time-efficiency

Like we mentioned earlier, the real estate cash flow calculator saves time and effort because you don’t need to enter the data for the investment property analysis manually. More so, it’s easier to compare numerous real estate properties at once. Thus, it’s quicker and easier to select the best investments for your business.

  1. Accurate Real Estate Analysis
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The investment property calculator provides investors with accurate results.  This tool hides lower risks of error compared to the spreadsheets method.

  1. Might be Costly

One widespread disadvantage of investment property calculators is their cost. Most of the real estate platforms offering the tool charge investors for using it. However, there are free versions of these calculators available. Sadly, they only offer limited functions. 

How Investment Property Calculator Functions

An investment property calculator enables you to predict the outcomes and viability of a rental property. These predictive outcomes result from computed pre-entered cost assumptions of the investment property. Thus, the tool calculates many things, and most of the important ones include: 

  • Cap Rate

The capitalization rate represents a real estate investment property’s rate of return (RoR). This RoR relies on the investment property’s expected rental income. Simply put, the capitalization rate calculates the property’s net operating income (NOI) over its current market value.

  • Cash on Cash Return

The rental property calculator calculates the property’s cash on cash return which is the net operating income (NOI) over the cash investment. It typically calculates the profits from the money invested in the property. 

  • Rental Income

Simply put, a rental income is the funds a property owner collects from tenants occupying the rental real estate. 

About the STS Rental Property Calculator

The rental property calculator from the Short Term Shop (STS) is the ultimate investment calculator on the market. Besides being fast and affordable, there are other distinguishable features of this great real estate investing tool. They include:

  1. Provides Unique Additional Data
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The STS rental property calculator calculates essential indicators like the cash on cash return, cap rate, and rental income. Besides that, it allows you to see existing and potential investors’ cash flow, operates efficiently, and provides accurate data.

  1. Detailed Neighborhood Analysis

The rental property calculator from the STS provides you with accurate neighborhood analysis in your selected location. After selecting the neighborhood, you can also use the tool for a thorough investment property analysis. 

  1. Suggests Optimal Rental Strategy

The ultimate goal in real estate investing is to make money. With the STS rental property calculator, it’s easier to achieve your aim. When renting out your property, the rental strategy you adopt is crucial. Thus the STS calculator will suggest optimal rental techniques for a successful investment.  

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Summary

A rental investment property calculator is a must-have tool for every real estate investor who wants to make wise investment decisions and lessen the amount of risk from investing in a rental property. 

Consider making this tool your best friend as a new investor looking to dip your feet into real estate rental property investment. While several platforms are advertising one investment calculator or another, don’t forget that some rental property investment calculators pack more features for a detailed and accurate result than others. So make a wise choice!

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