Real Estate Agent · Sacramento Metropolitan Area · Member since 2022 · 19 posts · 8 votes
e.g. I would like to plug in the current single family home I own to see it's rentability, but I'm not sure what numbers to plug in for the loan amount, down payment amount, apr, etc. Since I'm not purchasing the house and instead already own it.
Real Estate Agent · Skagit Valley, WA · Member since 2021 · 256 posts · 283 votes
4y
Even without a calculator.... you can just keep it simple.
1. How much is the mortgage (PITI) each month?
2. How much can you rent your home for?
3. What kind of margin does this give you? If #2 is already less than #1, you can rent your home, but with a negative cash flow.
4. If #2 is more than #1 you can add some further calculations:
5. For vacancy, just try multiplying #2 X 11 (assuming 1 month each year that you're not collecting rent).
6. Now take the answer to #5 and multiply that by 10% / .10 - you could think of that number as needed for maintenance and capital expenses during the 12 month period. (5% for each)
7. If you assume all the utilities will be paid for by the renter, you can ignore that number.
8. If you're planning to manage it yourself, you can ignore a management number as well. Otherwise, multiply #5 by 8-10% to cover the cost of property management.
Now, somewhere in all of this you should be getting a sense of where you are..... #5 - #6 - #7 - #8 - (#1 X 12) = estimated cash flow. How is it looking?
Real Estate Agent · Lansing, MI · Member since 2020 · 170 posts · 91 votes
4y
@Julian Wyer Do you own the house out-right (ie. No mortgage)? Or do you still make monthly payments on it?
Either way, when in the BP calculator, I would input $0 for your PURCHASE PRICE, 0$ for CLOSING COSTS and select 'Cash Purchase' under the LOAN DETAILS.
Then, if you are not making any monthly mortgage payments and the house is paid off, there is nothing else to do to "Manipulate" the BP Calculator. If you are making monthly mortgage payments still, scroll to the bottom of the BP Calculator under EXPENSES, select 'Other' and input your monthly payment mortgage as a 'Mortgage Payment' expense.
Troy, In point 7, you said I can ignore the number if I plan on the renters paying they're utilities, which I do, Would I completely ignore that number since you had 5% of that 10% for maintenance costs?
Real Estate Agent · Skagit Valley, WA · Member since 2021 · 256 posts · 283 votes
4y
@Julian Wyer If the renters are paying for all the utilities, then it's not an expense for you to worry about - zero dollars. 5% for maintenance and 5% for capex are totally different from the utility costs.
What I was attempting to show above is that even without a calculator (and they ARE super helpful - I use them all the time) - subtracting all the expenses from all your income will help you get to the same number - the profit (cash flow) you can expect to receive from this investment.
Income = total rent + other income (parking, storage, laundry, etc.) - vacancy
Expenses = debt service (your principal and interest on the loan if you have one), taxes, insurance, utilities, maintenance, capital expenses, property management (if you don't manage things yourself.)
Of course, this is just one simplified way of looking at the numbers. Calculators will help you further manipulate the income, expenses, and finances in such a way that you can quickly see other numbers such as NOI, Cap Rate, Cash-on-Cash, various rates of return (ROI), etc.