Real Estate ROI Calculator
REAL ESTATE ROI DEFINITION:
This Real Estate ROI calculator will allow you to determine the return on your real estate investment in just a few seconds. Start by entering the following information into this free financial calculator:
- Property Price – This should be the total purchase price of the property, including any closing fees, the down payment, and any portion that will be financed.
- Down Payment – Enter the percentage of the purchase price entered above that is being brought to closing as a down payment.
- Mortgage Rate – Enter the interest rate on the mortgage being taken out on the property. Be sure to enter the APR.
- Yearly Taxes – This is an estimate of the total yearly property taxes that will paid on the property. While this will probably be an estimated amount until the first tax bill arrives, you can use a figure based on the property purchase price and the millage rate.
- HOA Monthly Fees – Some properties will be part of a Home Owner's Association. The fees or dues for these groups must be paid or the HOA is allowed to foreclose on the property. Therefore, it is important to figure this cost into the total investment costs.
- Monthly Rent – This figure can be the current rental price for the property, or an estimated amount based on similar properties in the area that are currently being rented.
Once these numbers have been entered, the calculator will produce a table at the bottom of the page that displays the total cash invested, the estimated management costs, HOA and Taxes, the estimated monthly mortgage payment, the gross income that can be expected from the property, the estimated total expenses that will be incurred by the property, the net income based on these two figures, and the ROI.
The estimated management costs are based on a formula that computes 8% of the cost of the property. This amount may vary depending on the location and condition of the property. The estimated monthly mortgage payment is based solely on the purchase price, down payment, and interest rate. It does not include taxes and property insurance.
Gross income is based on the rental price alone, it does not take into account any tax advantages to owning real estate. Estimated total expenses include the mortgage payments, taxes, HOA fees, and estimated maintenance.