Using This Rental Analysis Calculator
This is a simple tool to figure out if your property would make a good rental. Input the above numbers and click calculate to see the breakdown report. We believe in the book The Millionaire Real Estate Investor’s philosophy: if you can cash flow $1, it make can make sense as a rental property. This is $1 after you withhold/save money for all the categories in the above calculator.
This is all of the information for when you buy the home. We will use this information to figure out your mortgage payment (note that it will not include any sort of mortgage insurance – we assume that, as with most investments, are going to put down enough money to not have mortgage insurance).
We will also calculate the amount of money you will need to have on day 1 to fund the purchase, repairs, and closing costs.
Most rental properties will only have rental income. Add it all up for your rental income. If you have a duplex or multifamily unit, put it all in. You can add other income you might get for things like utilities, pets, laundry, etc.
If you have no idea how much a unit will rent for, start with an educated guess so you can see how the cash flow would be, then contact us for a full rental analysis so we can give you a very good idea if your guess is right and if it would still cash flow.
Make sure you put in a vacancy rate (how often you will not have renters paying you). The conservative number is 8% vacancy rate which equates to about 4 weeks without a renter. This leaves time every year for the renter to move out, us to hire cleaners to make it look good, us to get a handyman in to do any needed repairs, and us time to fill it with a great tenant. It is important to put numbers in like these because it helps us be conservative with our numbers. Ideally, we get a tenant that wants to live there forever, takes great care of the place, and even is ok with us raising the rent every year to keep up with market rent, but that doesn’t always happen so we plan to have it vacant.
This is where most people make mistakes in the rental analysis. Most people think, “I can rent it for $x and my mortgage is $y so I am going to make good money on this rental!” That might be true for a while until something breaks or goes wrong with the property. We want to plan (and ideally save) for these things. So even though we are putting all these as expenses, you won’t pay for them each month. For example, you should save for repairs but you won’t have a repair every month. So if you put $100 or so in savings for repairs, you won’t worry if something breaks because you will still make money.