Investment Property Analyzer – Rental Property ROI Calculator


Use the Income Property Analyzer to find the best investment properties

The Investment Property Analyzer will take the complex work out of evaluating the return on investment for any residential property investment. Just input a few numbers such as acquisition costs, rental income, interest rate, property and tax rate of any investment property and get back the expected 5 year return on your cash invested. Use this tool to evaluate potential investment property options. This calculator is easy to use but can also be fine-tuned using option inputs to match your specific situation or any local variations.

Return on Rental Property Investment Calculator

Complete the green boxes and this calculator will instantly display the ROI, cash flow, and IRR for this investment property. Adjust any of the required or optional inputs and the results will instantly update to reflect the changes.

Note: Assumptions are hidden by default. Expand the assumptions line to change the assumptions.

Step 1 – Purchase Assumptions

requireRequired InputsoptionalOptional Inputs
Home Value $ Price paid including capital improvements
Initial investment % down = $
Debt $
Interest rate % interest rate of mortgage
Assumptions (optional inputs)
Loan Term typical loan term (months, if no debt use term of 1)
Buying costs % of sales price

Step 2 – Income Assumptions
Monthly Rent $ Gross monthly rental income Find estimated rental rates here
Cap Rate %
Assumptions (optional inputs)
Vacancy rate % of annual term rental
Rent Increases % of monthly rent

Step 3 – Operating Cost Assumptions
Property Improvements $ initial expenditures to get home ready for rental
Assumptions (optional inputs)
Property mgt % of monthly rent
Maintenance % of property value
Insurance cost % of property value
Move-in Move out costs $ per change in vacancy (tenant placement fees, make ready, etc)

Step 4 – Property Sales Assumptions
Sales Price $
Assumptions (optional inputs)
Selling Commissions % of sales price = $
Annual Appreciation % yearly rate of price appreciation

Step 5 – Taxes, Inflation, & Return Assumptions
Land value % of purchase price = $
Tax basis $
Property tax % of property value Find estimated property tax rates here
Assumptions (optional inputs)
Tax Rate % ordinary income tax rate for investor/owner
Capital Gains tax %
Cost inflation rate % applied to maintenance,turnover & insurance costs
Investment Hurdle rate % annual rate, for comparison to other investments

Expected Rate of Return & Cash Flow Summary
Return on Cash Invested  
Projected 5 year IRR

Internal Rate of Return (IRR): IRR calculations are commonly used to evaluate the desirability of investments or projects. The higher a project’s IRR, the more desirable it is to undertake the project. Assuming all projects require the same amount of up-front investment, the project with the highest IRR would be considered the best and undertaken first.
http://en.wikipedia.org/wiki/Internal_rate_of_return

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  Initial Year 1 Year 2 Year 3 Year 4 Year 5 Net Total
Projected Cash Flow
 
Show Detailed Investment Performance Tables
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hideTable 1 – Cash Flows & ROI Details

Cash Flow Details Initial Year 1 Year 2 Year 3 Year 4 Year 5 Total
Purchase Investment          
Net Cash Flow (see Table 2)
Sales Price        
Selling costs        
Taxable Gain

See the following Sales Transaction Details for calculations.

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Taxes        
Note Payoff (see Table 4)        
Total Annual Cash Flow
  Year 1 Year 2 Year 3 Year 4 Year 5 Total
ROI Details – Net cash flow
Present Value – Cash flows discounted by hurdle rate
Walk Away Price – Breakeven price between renting and selling
Sales Transaction Details         Year 5 Total
Sales Price        
Selling costs        
Cash Proceeds (before taxes and note repayment)  
Depreciated Basis  
Taxable Gain  
Depreciation Recapture Tax

Depreciation Recapture is
when real property is sold at a gain and depreciation had been claimed, the owner is required to pay a tax at ordinary rates to the extent of the depreciation on residential real estate.

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Capital Gains Tax
Note Payoff (see Table 4)
Cash from Sale (proceeds less taxes and less debt)
 

hideTable 2 – Yearly Financial Projections Details

Financial Projections Year 1 Year 2 Year 3 Year 4 Year 5 Total
Rent Income
 
Rental Expenses            
Interest
Taxes
Insurance
Tenant Turnover costs

Tenant Turnover Costs reflects estimated costs when a home is vacant and is re-rented. It reflects make-ready costs, leasing commissions, and advertising (if self-managed). Lower vacancy rates and longer term leases reduce these expenses. The U.S. average is 8%.

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Maintenance
Buying cost
Professional Management
Total Rental Expense
Net Income1
Depreciation
Taxable income
Tax (benefit) cost2
Principal Reduction3
Capital expenditures4
Net Cash Flow (1-2-3-4)

hideTable 3 – ROI Table Details

  Year 1 Year 2 Year 3 Year 4 Year 5
Initial Investment
Yearly Price Appreciation
Appreciation Net of Taxes
Net Cash Flow
Net Worth Increase
ROI (net worth/initial investment)

hideTable 4 – Year Ending Balances Details

Ending Year Balances
Debt Calculations Beg. Balance Year 1 Year 2 Year 3 Year 4 Year 5
Loan Balance
Interest  
Principal Reduction  
Mortgage Payments  

Sample Material Disclaimer

Provided by All Property Management “as is” for demonstration purposes only without warranty of any kind, express, implied or statutory. Examples, if any, are based on limited and dated information and may not be relied upon for accuracy or any other purpose other than illustrative of possible results. ©2013 Seamusco, LLC.

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