The real estate market has changed dramatically over the past several years and so have the tools used to be a savvy investor. Thus, it is important to adapt to today’s market and use these tools to our advantage. Simply visiting the property and touring the area will do nothing in regards to determining the property’s bottom line. Nor will using antiquated spreadsheets that do not have comprehensive formulas for determining a property’s Cash-on-Cash Return, Return-on-Investment, CAP Rate, and realistic estimates for maintenance and vacancy.
Ask yourself this question: If you found a property listed for sale and then gathered all the necessary numbers, how long would it take you to determine the property’s projected profit? If the answer is anything more than 5 minutes, then you need to keep reading. And if you are the type to run the numbers with a pencil on a cocktail napkin, then you REALLY need to keep reading.
In today’s digital world of mobile computing, if you are using anything other than a web-based financial calculator, then it’s time to throw out that old Excel spreadsheet and get yourself a shiny new online calculator that you can access from any smartphone, tablet, or computer with internet connection.
The good news is, you DON’T have to reinvent the wheel. Marshall Reddick Real Estate, a residential real estate brokerage based out of Newport Beach, CA, spent years of development and more money than you can imagine developing the most comprehensive, user-friendly property financial calculator on the internet.
Click here to begin using your new Property Financial Calculator:
The following is a brief explanation of what this incredible Property Financial Calculator includes:
- Closing costs can vary based on the loan amount. Simply click on the function symbol (fx) to the far right of the Closing Costs field to see what percentage is used based on the loan amount of the transaction.
- Estimated Vacancy and Maintenance are almost always underestimated by investors. Using 8% of the monthly rent for vacancy allows for 30 days each year. Is anything less than that realistic? See our Reddick Property Rating eBook to educate yourself on how vacancy and maintenance can vary depending on the Property Class.
- ALL Property management fees must be accounted for. If you are only factoring in the monthly management fee and leaving out the Leasing fees, then you are not going to know your true return. Hover your cursor over “Leasing Fee” to figure out how this number is calculated on a monthly basis.
- Adjust the loan amortization to see how it affects the mortgage payment if you were to select a 15-year loan term versus a 30-year term.
- Return on Investment section allows you to input the anticipated annual appreciation rate and the number of years you plan on holding the investment for to calculate your Total Projected Profit and Annual Return on Investment.
- Selling Expenses must always be factored to achieve your anticipated profit from owning the property as well as your true Return on Investment. Hover your cursor over “Selling Expenses” to see exactly how these fees will be applied.
- Principle Paydown is equity you are building, and eventually money in your pocket when you sell. Ever wonder how much of your principle loan amount will be reduced depending on how long you hold the property for? This amount must be factored in order to achieve your Total Projected Profit and Annual Return on Investment.
- Ever wonder what the actual formula for Cash-on-Cash Return and Return on Investment are? Simply click on the function symbol (fx) to the far right and you will see exactly how to calculate these formulas.
- Hover your cursor over Cash Reserves to see our suggested reserve amount depending on your monthly expenses.
- Click on the pie graph symbol to the right of fields like Total Expenses and Cash Flow to see how the expenses and income change over time.
At Marshall Reddick, we are real estate investors first and foremost, and as such, it is crucial that we share the knowledge we’ve acquired through decades of experience. We hope you find tremendous value in using this tool, and would love to hear from you. We offer complimentary consultations over the phone or in person. Simply create a free account on our website to get started.