Real Estate Calculator
Analyze real estate investments with detailed cash flow, ROI, and market comparison calculations
Real Estate Calculator
Analyze real estate investments with detailed cash flow and return calculations
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Real Estate Investment Analysis
Real estate investment analysis involves evaluating multiple financial metrics to determine the profitability and viability of a property investment. Understanding these metrics helps you make informed decisions and compare different investment opportunities.
Key Investment Metrics
- Cap Rate: Net Operating Income ÷ Property Value
- Cash-on-Cash Return: Annual Cash Flow ÷ Cash Invested
- Cash Flow: Income minus all expenses and debt service
- Gross Rent Multiplier: Property Price ÷ Annual Rent
- 1% Rule: Monthly rent should be 1% of purchase price
- Total Return: Cash flow plus appreciation
Investment Strategies
- Buy and Hold: Long-term rental income and appreciation
- Fix and Flip: Renovate and sell for quick profit
- BRRRR: Buy, Rehab, Rent, Refinance, Repeat
- House Hacking: Live in one unit, rent others
- Commercial Real Estate: Office, retail, industrial properties
Real Estate Investment Formulas
Capitalization Rate
Cap Rate = (NOI / Property Value) × 100%
NOI = Net Operating Income (before financing)
Cash-on-Cash Return
CoC = (Annual Cash Flow / Cash Invested) × 100%
Cash invested includes down payment and closing costs
Net Operating Income
NOI = Gross Income - Operating Expenses
Does not include mortgage payments or depreciation
50% Rule
Operating Expenses ≈ 50% of Gross Income
Quick estimation for operating expenses
Investment Considerations
Due Diligence Checklist
- • Property inspection and appraisal
- • Market analysis and comparable sales
- • Rental market research
- • Title and legal review
- • Insurance requirements and costs
- • Local regulations and zoning laws
- • Future development plans in area
Risk Factors
- • Market volatility and cycles
- • Vacancy and tenant turnover
- • Maintenance and repair costs
- • Interest rate changes
- • Local economic conditions
- • Regulatory changes
- • Natural disasters and insurance
Frequently Asked Questions
What's a good cap rate for rental property?
Cap rates vary by location and property type. Generally, 4-6% is typical for stable markets, 6-8% for growing markets, and 8%+ for higher-risk markets. Compare to local market averages and consider the risk-return profile.
Should I follow the 1% rule?
The 1% rule (monthly rent = 1% of purchase price) is a quick screening tool but shouldn't be the only factor. In expensive markets, 0.5-0.7% might be acceptable if appreciation potential is strong.
How much should I budget for maintenance and repairs?
A good rule of thumb is 1-2% of the property value annually for maintenance and repairs. Older properties may require 3-4%. Factor in major replacements like roofs, HVAC, and flooring over time.
What's the difference between cash flow and appreciation?
Cash flow is the monthly income after all expenses - it's your immediate return. Appreciation is the increase in property value over time - it's your long-term return. Both contribute to total investment return.