Investment Calculator
Analyze real estate investment returns and cash flow
How to Analyze Real Estate Investment Properties
Understanding key metrics is essential for making informed real estate investment decisions. Our free calculator helps you analyze rental properties, BRRRR deals, fix-and-flip opportunities, and multi-family investments.
Key Investment Metrics
- Cap Rate: Net Operating Income ÷ Property Value. A good cap rate is typically 5-10%.
- Cash-on-Cash Return: Annual Cash Flow ÷ Total Cash Invested. Target 8-12% or higher.
- Gross Rent Multiplier: Property Price ÷ Annual Rent. Lower is generally better.
- DSCR: Debt Service Coverage Ratio. Lenders typically require 1.25 or higher.
The 1% Rule
The 1% rule suggests that monthly rent should equal at least 1% of the purchase price. For example, a $200,000 property should rent for at least $2,000/month. This quick screening tool helps identify potentially profitable properties.
The 70% Rule for Flips
When flipping properties, your maximum purchase price should be 70% of the After Repair Value (ARV) minus repair costs. This ensures adequate profit margin after all expenses.
Frequently Asked Questions
What is a good cap rate for rental property?
A good cap rate varies by market and property type, but generally 5-10% is considered healthy for residential rentals. Higher cap rates indicate more income relative to price but may come with higher risk or lower-quality tenants.
How do I calculate cash-on-cash return?
Cash-on-cash return = Annual Cash Flow ÷ Total Cash Invested × 100. Total cash invested includes down payment, closing costs, and renovation costs. Many investors target 8-12% or higher.
What is the BRRRR strategy?
BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. You purchase a distressed property, renovate it, rent it out, then refinance to recover your initial investment. This allows you to recycle capital into multiple properties.
What expenses should I include in rental property analysis?
Include property taxes, insurance, HOA fees, property management (8-10%), maintenance (5-10%), capital expenditures (5-10%), vacancy (5-8%), and utilities if applicable. Our calculator helps you account for all these expenses.
How do I calculate ROI on a house flip?
Flip ROI = Net Profit ÷ Total Cash Invested × 100. Net profit equals sale price minus all costs (purchase, closing, renovation, holding costs, selling costs, and taxes). Our calculator provides detailed flip analysis including annualized returns.