Showing posts with label analysis tools. Show all posts
Showing posts with label analysis tools. Show all posts
Windows 7 Calculator Tip
I've just upgraded to Windows 7 and am still exploring all the new features, but one thing I noticed that could be of use to real estate investors is a new function in Calculator. Now Calculator can easily figure out any one of the following items given values for the others: Monthly Payment, Purchase Price, Down Payment, Term (Loan Length), and Interest Rate. No more messing around with spreadsheet formulas! Below is a picture of how to access this. (Click for larger size.)
REI App For The iPhone
A week ago today, I got an iPhone. I don't know how I lived without this thing before! It is far more than just a phone. There are hundreds of applications out there, many of which are free, that provide useful functionality, good entertainment, or both.
One free app I found is called Buy That Duplex Lite, or BTD Lite for short. This is a simple little investment property analyzer. You input the property price, down payment amount, loan interest rate, and loan length and it will calculate your monthly mortgage payment and cashflow. You can specify eight different monthly expenses (vacancy rate, maintenance utilities, property management fees, insurance, taxes, and Other) or accept the default values for these fields, and it will calculate your monthly cashflow. Although it is called Buy That Duplex, nothing in the program is specific to duplexes and this could be used to analyze any investment property. And although the calculations it performs are not complex and can be done in a spreadsheet or even by hand on paper, I think the real value of this program is that is runs on the iPhone. This enables you to take it with you when you go out looking at potential properties to perform on the spot analyses. It also gives you some ammunition for those real estate agents who assure you that every property they have available will cashflow. Simply plug in the numbers and see if he or she is telling the truth.
The default values for the expenses (entered as a percentage of the monthly rent) are reasonable and you can change them should you feel the need. I would like to see one more figure added to the cash flow analysis section: the annualized return on investment (ROI) percentage.
A version with more features, called Buy That Duplex Pro, is scheduled to be released next month. This version is set to include the features of the Lite version plus amortization tables, property appreciation tables, an equity analysis function, net sales proceeds calculator, and the ability to store favorites (for when analyzing and comparing several properties at once). No word on the cost for this version yet.
An added feature I would like would be a reverse calculation where you give the program the ROI you want, and it will calculate the price and/or down payment you need to obtain that rate of return. Perhaps that could be a feature in the full version of the program. It would also be nice if you could enter addresses for properties or use the iPhone's GPS feature to mark a location when at the property. Then tie that data into Google Maps. And how about using the iPhone's camera to take pictures of the various properties? Those would likely be deluxe features found in the pay version, but they would be very useful when comparing properties.
All in all, BTD Lite is a slick little program that will really help investors as they travel about searching for new properties to acquire.
One free app I found is called Buy That Duplex Lite, or BTD Lite for short. This is a simple little investment property analyzer. You input the property price, down payment amount, loan interest rate, and loan length and it will calculate your monthly mortgage payment and cashflow. You can specify eight different monthly expenses (vacancy rate, maintenance utilities, property management fees, insurance, taxes, and Other) or accept the default values for these fields, and it will calculate your monthly cashflow. Although it is called Buy That Duplex, nothing in the program is specific to duplexes and this could be used to analyze any investment property. And although the calculations it performs are not complex and can be done in a spreadsheet or even by hand on paper, I think the real value of this program is that is runs on the iPhone. This enables you to take it with you when you go out looking at potential properties to perform on the spot analyses. It also gives you some ammunition for those real estate agents who assure you that every property they have available will cashflow. Simply plug in the numbers and see if he or she is telling the truth.
The default values for the expenses (entered as a percentage of the monthly rent) are reasonable and you can change them should you feel the need. I would like to see one more figure added to the cash flow analysis section: the annualized return on investment (ROI) percentage.
A version with more features, called Buy That Duplex Pro, is scheduled to be released next month. This version is set to include the features of the Lite version plus amortization tables, property appreciation tables, an equity analysis function, net sales proceeds calculator, and the ability to store favorites (for when analyzing and comparing several properties at once). No word on the cost for this version yet.
An added feature I would like would be a reverse calculation where you give the program the ROI you want, and it will calculate the price and/or down payment you need to obtain that rate of return. Perhaps that could be a feature in the full version of the program. It would also be nice if you could enter addresses for properties or use the iPhone's GPS feature to mark a location when at the property. Then tie that data into Google Maps. And how about using the iPhone's camera to take pictures of the various properties? Those would likely be deluxe features found in the pay version, but they would be very useful when comparing properties.
All in all, BTD Lite is a slick little program that will really help investors as they travel about searching for new properties to acquire.
Real Estate Investment Profit Calculator
There is no shortage of real estate and mortgage calculators on the web. Almost all are pretty simple, but they do a decent job of giving you a general estimate of what to expect given a certain set of assumptions. Some time ago, I came across the most comprehensive real estate investment calculator I have ever seen. I think I found it via Clifford of Changing My Direction, but I'm not 100% sure.
This calculator not only takes into account standard data such as purchase price, down payment, loan interest rate and length, taxes, and insurance, but is also figures out the effect the investment will have on your taxes, including depreciation, income, etc. The calculator outputs data for the first 10 years of your investment. It's pretty impressive.
As with any analysis tool, the results are only as good as the data you put in. I put in what I think are fairly conservative values for an analysis of my Rental #1 property. Some of the data I used were: 3% annual income increase (default is 5%), and 3% annual appreciation rate (5% is default). I used a maintenance rate of 5% of income - my previous calculations used a fixed dollar amount which worked out to about 2.7% of income. I also said I'd put in $5,000 of capital improvements above and beyond the maintenance amount.
According to the calculator, my return on my initial equity (down payment plus capital improvements) is 21.50% my first year, 22.55% my second year, and increasing to 32.22% by year 10.
The calculator also shows your return on total equity, which takes into account appreciation and your decreasing loan balance. This is really nice because this value will actually decline each year since your equity is rising faster than your investment income increases. My return on total equity starts out at 21.50% and by year 10 drops to 12.54%. This is a great piece of information to have. You can see very easily where the property drops belong your minimum ROI you want an investment to have. At that point, you can sell the property or refinance the loan to take more money out.
This calculator not only takes into account standard data such as purchase price, down payment, loan interest rate and length, taxes, and insurance, but is also figures out the effect the investment will have on your taxes, including depreciation, income, etc. The calculator outputs data for the first 10 years of your investment. It's pretty impressive.
As with any analysis tool, the results are only as good as the data you put in. I put in what I think are fairly conservative values for an analysis of my Rental #1 property. Some of the data I used were: 3% annual income increase (default is 5%), and 3% annual appreciation rate (5% is default). I used a maintenance rate of 5% of income - my previous calculations used a fixed dollar amount which worked out to about 2.7% of income. I also said I'd put in $5,000 of capital improvements above and beyond the maintenance amount.
According to the calculator, my return on my initial equity (down payment plus capital improvements) is 21.50% my first year, 22.55% my second year, and increasing to 32.22% by year 10.
The calculator also shows your return on total equity, which takes into account appreciation and your decreasing loan balance. This is really nice because this value will actually decline each year since your equity is rising faster than your investment income increases. My return on total equity starts out at 21.50% and by year 10 drops to 12.54%. This is a great piece of information to have. You can see very easily where the property drops belong your minimum ROI you want an investment to have. At that point, you can sell the property or refinance the loan to take more money out.
