Investment Property Calculator FAQ
What does this investment property calculator estimate?
It estimates gross effective income, NOI, annual debt service, cash flow before taxes, cap rate, ROE, DSCR, and longer-term results such as sale proceeds, total profit, and IRR.
How is gross effective income calculated?
Gross effective income is expected rental income reduced by vacancy. The calculator uses the formula gross potential rental income × (1 - vacancy rate) for the first year, then applies rent growth in the holding-period projection.
What should be included in operating expenses?
Operating expenses should include recurring ownership and operating costs such as property tax, insurance, repairs, management, utilities paid by the owner, CapEx reserves, and similar recurring costs. They should not include mortgage principal or interest.
What is the difference between NOI and cash flow?
NOI is income after vacancy and operating expenses, but before financing. Cash flow before taxes (CFBT) goes one step further by subtracting annual debt service. That is why a property can show a positive NOI and still have weak or negative cash flow after financing.
What is cap rate?
Cap rate is NOI ÷ property value. In this calculator it is shown as a first-year metric, and when repairs are enabled it uses the value after repairs as the value basis rather than the original purchase price.
What is cash-on-cash return?
Cash-on-cash return compares first-year annual cash flow with the initial cash invested. Initial cash invested includes equity put into the deal, buyer closing costs, and repair cost when repairs are enabled.
How are sale price and net sale proceeds estimated?
You can either project sale price from annual appreciation and holding period or enter a manual sale price. Net sale proceeds are then estimated as sale price - selling closing costs - remaining loan balance.
When does IRR show N/A?
IRR shows N/A when the cash-flow pattern does not support a usable internal rate of return or when the numerical solution does not converge. This can happen with unusual combinations of very short holds, no cash inflows, or highly irregular cash-flow timing.