Real
estate investing can be complicated to understand, but there are some principles
that are useful as quick starting points when analyzing investments. Every
market is different and it is very possible that some guidelines will not work
for certain situations. It is extremely important that they be treated as such,
not as replacements for hard financial analysis nor advice from real estate
professionals, things that should always get the nod over overgeneralized guidelines.
An investment property can be an excellent investment. The investment property
calculator is designed to examine the potential return you might receive from
an investment property and also allows you to enter basic figures associated
with property purchase, maintenance and holding fees while delivering a raft of
insightful information that might shed light on a prospective property’s
potential. As a building gets older and items within it wear out, they
depreciate in value. The Melbourne investment property calculator also factors in the
state in which the property is located, and considers potential tax concessions
and cash shortfalls. Opening up an array of scenarios, and conveniently
quick and simple to use, this calculator puts handy information.
Definitions:
Cash Invested
The
cash amount out of pocket required for the purchase of this property.
Interest Rate
The
amount of interest the investor pays annually to borrow money from the lender.
Rates and programs can vary, check with lender for more information.
Land Value
The
approximate value of the land that the property sits on. Usually available on
the tax records in the county the property resides. You cannot deprecate land
value.
Personal Property
Anything
that you have that is used for the investment property, such as washer/dryer,
range, refrigerator lawn equipment, fixtures and other.
Personal Property
Depreciation Rate
The
rate annually you can depreciate on the personal property.
Building Value
Depreciation Rate
Recovery
period for five-year personal property.
Appreciation
The
amount the property is appreciating on an annual basis. Appreciation occurs on
entire value of the property.
Loan
P & I
P=principle,
I=interest
Total Depreciation
Total
amount you can depreciate annually on personal property and building value.
Gross Operating Income
The
amount of income available after vacancy.
Total Annual Operating
Expense
The
total annual expenses including real estate tax, repairs, management fees,
insurance, utilities, supplies, and other miscellaneous expenses.
Operating Expense Ratio
It's
the percentage amount- based on the income 23 - 30% is considered average.
Net Operating Expenses
Total
annual amount of expenses.
Cash Flow Before Tax
What's
left after expenses, principle payment and interest.
Annual Debt Service
Your
payment to lender including principal and interest.
Return on Investment
w/appreciation
Cash
flow before tax + principle reduction + taxes saved/paid + appreciation divided
by cash invested. Includes appreciation.
Return on Investment w/
out Appreciation
Cash
flow before tax + principle reduction + taxes saved/paid divided by cash
invested.
Cap Rate
Net
operating income divided by price, capitalization rate, rate of return. Over
10% is considered an excellent rate.
Cash on Cash
Cash
flow before tax % cash invested.
The
Melbourne investment property calculator provides an estimate of how much an investment
property will cost. It provides an estimate of the amount of cash you will
require on a monthly an annual basis to fund your investment property. It also
gives an indication of the change in the amount of tax you will pay due to
owning an investment property Before making any investment decisions you should
consult your financial adviser.
