Recommended calculator?

General Real Estate Investing
1

Can anyone recommend a good online calculator to use for calculating cash flow etc. on a rental property?
Thanks,
Rich

2

Total Income - Total Expenses = Cashflow.

That’s pretty much as simple as I can make it. I use “stubby pencil”

Actually, I use MS Excel.

Keith

3

I also use excel.

4

Thanks for asking this question Rich. It really is a really important question.

There are the really simple answers like Keith pointed out, but there are also some more involved ways to do some calculations that you might need from time to time. For example, if you are going to do lots of analysis on properties it might help to set up a little spreadsheet to run some numbers.

For example, here is a screen shot of one that I set up as part of my own spreadsheet that I personally use to calculate Net Operating Income (the amount of money that is left over after you subtract all the expenses on the property EXCEPT for the debt payments).

http://learntoberich.com/wp-content/uploads/2011/03/Net-Operating-Income-Calculation-Tab-On-Offer-Generator.png

If you’re just going to do a few mortgage or loan payment calculations you can use a financial calculator like the Texas Instruments BA II Plus that you can get at WalMart or most office supply stores for about $30. You can probably also find some websites that offer you the ability to do some payment calculations as well. It has been a while since I actually looked for one, but I imagine Google could point you to a few if you do a search for mortgage payment calculator or something like that.

As I mentioned, you can use Microsoft Excel if you have it. Some things you will want to know if you are doing it using Excel. The formula for typing into your spreadsheet for calculating payments is:

=PMT(rate,nper,pv,[fv],[type])

For example, if you wanted to find out the payment to do a $100,000 loan at 8% for 360 months, you would enter in the cell:

=PMT(0.08/12,360,100000)

The rate would be .08/12 (that’s 8% per 12 months), 360 months and $100,000 as the amount. You will notice that we did not use “fv” (that’s future value) at all since we assume we want the loan to be paid off to zero at the end of the 360 months. Also, “type” is for whether payments are made at the beginning or end of the period. We ignore that too.

Of course, if you want to figure out what the most you can afford to pay for the property when you know how much monthly the house can afford to pay, you will use a different formula in Excel:

=PV(rate,nper,pmt,[fv],[type])

That will tell you the present value (PV) of a loan. In the following example:

=PV(0.08/12,360,-733.8, 0)

It will tell you how of loan the property can support at 8% per year for 360 months with a monthly payment of $733.80 per month to have it end up at $0 at the end of the 360 month loan duration.

You can also get apps for you iPhone or iPad to do these types of calculations as well. For example, I have an app called “Mortgage Payment Calculator” on my iPad that is pretty nice. I think it was free, but I am not 100% sure and since it is installed it is not showing me the price in the app store anymore (it just says installed).

As more of an advanced strategy, I created myself a little spreadsheet that gives me a wide range of choices in offers. The image of that is below.

http://learntoberich.com/wp-content/uploads/2010/11/Excel_Offer_Generator_V1.png

Basically, what that particular spreadsheet does is it allows me to see the number of payments I would need to make using the Net Operating Income for a range of prices and interest rates for owner financing.

Please let me know if that helps.

Thanks.

5

James, yeas that looks good, can you include the formulas?
Thanks,
Rich

6

Thanks for the reply Rich.

No problem. The formula for doing that is just the one to tell you the number of payments in Excel:

=NPER(rate,pmt,pv,[fv],[type])

Where:

  • rate (rate) is the interest rate (the numbers across the top)
  • the payment (pmt) is the Net Operating Income that I calculate on the input fields of the spreadsheet
  • the present value (pv) is the agreed purchase price minus the agreed upon down payment from my input fields on the spreadsheet
  • the future value is the price at which I lock in the exact profit on the deal that I want to make

I just use that same formula in each one of the cells but have a different interest rates (across the top) and different purchase prices (along the left hand side) that change for each different cell.

Of course, the color coding is a feature of the newer Excel spreadsheets.

This is especially helpful for making owner financing offers.

Please let me know if you have any other questions about it.

7

Thanks James,
So those formulas are plugged into every cell so you have a ready-made chart to refer to when house hunting right?
I was asking about the one above that with the yellow input cells, but looking at it again, I see that the results cells would be simple multiplication, sum etc. formulas.
Thanks,
Rich

8

Ahhh! If you are asking about my input sheet, the ones in yellow are inputs (no formula at all since you type in the value). The calculations on that sheet are all pretty straight forward addition, subtractions and stuff. Nothing fancy at all.

9

Hey James, is there a way I can get a copy of that spreadsheet of yours?

10

I did just send you a PM about how to get it. If you have any questions about it just reply to the PM.

Thanks.