Real Estate Investment Calculator

Analyze potential real estate investments by calculating key metrics such as cap rate, cash-on-cash return, ROI, and more. Make informed investment decisions with our comprehensive real estate calculator.

Property Details

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Current estimated market value of the property

Financing Details

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Automatically calculated based on purchase price and down payment

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years
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Expected annual property value increase

What is a Real Estate Investment Calculator?

A real estate investment calculator is a specialized tool designed to help investors evaluate the financial viability and potential returns of real estate investments. By analyzing factors such as purchase price, rental income, property expenses, and financing terms, it provides key metrics that indicate the strength of an investment opportunity.

This calculator helps you make data-driven decisions by calculating metrics like cash flow, cap rate, cash-on-cash return, and long-term ROI. These metrics are essential for comparing different investment properties or evaluating a single property against your investment criteria.

Key Real Estate Investment Metrics

Capitalization Rate (Cap Rate)

The cap rate is a measure of a property's profitability regardless of financing. It's calculated by dividing the net operating income (NOI) by the property value and is expressed as a percentage. Higher cap rates generally indicate higher potential returns but may also suggest higher risk. A good cap rate varies by location and property type, but typically ranges from 4% to 10%.

Cash-on-Cash Return

Cash-on-cash return measures the annual cash flow relative to the amount of cash actually invested. Unlike the cap rate, it takes financing into account and shows how efficiently your invested capital is working. It's calculated by dividing the annual pre-tax cash flow by the total cash investment. Most real estate investors look for a cash-on-cash return of at least 8-12%.

Return on Investment (ROI)

ROI takes into account both cash flow and appreciation over time, providing a more comprehensive view of an investment's performance. It's calculated by dividing the total gain (cash flow plus appreciation) by the initial investment. Our calculator provides a 5-year ROI projection based on your inputs for appreciation and cash flow.

Gross Rent Multiplier (GRM)

The GRM is a simple ratio that compares the property price to its gross annual rental income. It's calculated by dividing the property value by the annual gross rental income. A lower GRM may indicate a better investment opportunity. Generally, a GRM between 4 and 7 is considered good, though this varies by market.

How to Use the Real Estate Calculator

  1. Enter the property purchase details, including purchase price, down payment, closing costs, and renovation costs.
  2. Input the financing information, including interest rate and loan term. The loan amount will be calculated automatically.
  3. Add the income information, including monthly rent, other income, and assumptions about vacancy rate and rent increases.
  4. Enter the operating expenses, including property tax, insurance, maintenance costs, and other regular expenses.
  5. Click the 'Calculate Returns' button to see a comprehensive analysis of the property's investment potential.

Once you've calculated the results, you can review key metrics like cap rate, cash-on-cash return, and projected ROI. These will help you determine if the property meets your investment criteria. You can also download the results for your records or to share with partners or advisors.