I have been hearing a lot of advice from the Biggerpockets forums and podcasts that the more properties you analyze, the better investor you will be. The common ratio is for every 100 properties you look at, you put down 10 offers, and you get 1 offer accepted. With that style of thinking, I want repeatable, reliable, and easy to understand numbers while think about my future in real estate.
Over the past week or two, I've been developing my latest property analysis worksheet on Google Drive using Sheets. I have made them before, but I didn't understand the numbers or it would be too complex to use. With Google Drive, I can access it on my phone or on any computer with Internet access. This allows me to edit, or add information to my worksheet whenever I am thinking about it.
My Rental Property Calculator:
My rental property calculator starts with a link to the property. This is most likely zillow.com or something similar now days. Below that I place the address and the number of bedrooms and bathrooms in the property. This is what helps me picture the size of the property and how easy it will be to rent. Then I place how much I could reasonably rent the place for. I try to get an estimate through rentometer.com or zillow.com for some comparable properties.
Now we are getting to the numbers. I have included the HOA or COA fees and the property tax estimates per month. These fees are separated because these are rather fixed and you can't reduce them easily.
For the other operating expenses, i have several categories:
- Capital expenditures and general repairs. I conservatively place $200 in that column per roof per month.
- Management. I have put down 10% to be conservative. Even if I am to manage it myself, I still want to be paid for my efforts and perhaps someday I want someone else managing, I would expect to pay around 6% in this current market.
- Vacancy. I estimate this at 8%, or one month a year. I think most places in my markets do not sit empty for long if at all. The over flow here would possibly help pay down the mortgage then.
After these are all calculated, I now subtract all expenses from the rent to result in my after expenses cash flow. This is the number that if I don't have a mortgage, would be pocketing each month.
Next, I have my mortgage calulations. First, I have how much it would cost me per month if I could get 100% financing at a conservative interest rate of 4.25%. I know it is impossible to get 100% financing but I would like to know how much it could cost.
I also calculate 90%, 80%, and 75% LTV mortgages. I list off how large the down payment would have to be, the resulting profit per month, and then the cash-on-cash return on that down payment.
Have you made your own rental property calculator? What have you included in yours?