Beginner Investing – Real Estate Investing – Investment Property Calculator
Various Investment Information
Today on Beginner Investing I wanted to give you all a glimpse at a tool I have grown to love. I came across this calculator a few days ago and my heart fluttered. Being a major number cruncher, this little application was right up my alley.
Here is a break down. You put in the purchase value, down, taxes, expected rental income, management fees, etc. and you get back a list of statistics that show you the value of the investment. For example, those who have been reading this blog are aware that I am looking at finding a way to turn my current home into an asset instead of hounding me as a pocketbook draining liability.
If I punch in the following: 190k price, 0 down, 500 insurance, 2000 taxes, 1100 rent, 6.55 interest rate, 300 for fees/maintenance, 3% increase and inflation, and leave the appreciation at 1% (negligible for a cash flow calculation) then I get the following information (note that year one is always the worst because rents get raised annually):
Cash flow (pretax): -7384 (holy hell that sucks)
But wait, I get tax breaks right?
Tax Saved (returned from write offs): 1734 (not much but its something)
This means that after taxes I have a post tax break annual cash flow of: -5650 (-470/month)
In other words, if I rent out the property at the market rate and have a management company handle it for me, then I lose 470$ a month! F-that!
Oh, we aren’t done yet. Phew. Part of those mortgage payments are actually against the principle, which means it comes back to me when I pay off the loan. That amount? 2039$
So my real annual cash flow is 2039-5650= -3611 or -301/month. Well that hurts. Though if you read my earlier posts you know that living in my home I’m losing closer to 810 a month. So renting out my place would save me 500/month. But then I would have to rent or purchase another place.
Regardless, before I get too far off track, the point is this. Say I can bump that rent up by 100$ a month the first year. My yearly cash flow comes to: -184/month!
And 1300 rental? -13/month!!! This calculator really lets you break down scenarios fast!
I highly suggest all of you play around with this little beauty. I couldn’t stop running numbers all day the day I found it 
Oh and remember, I was NOT counting appreciation. As far as I am concerned appreciation cannot be counted on and remains unpredictable. If you buy property that has positive cash flow, you can guarantee that (almost) and look at appreciation as pure bonus. A very, VERY nice bonus
You can find the calculator HERE. Or just look for it on my Utilities links to the far right.
Catch you all next time on Beginner Investing!
Tags: beginner investing, investment property, Passive Income, real estate investing
