Estimate the profitability of a rental property investment.
Estimated Monthly Cash Flow:
$0.00
(This is an estimate. Actual results may vary.)
Understanding the BiggerPockets Rental Property Calculator
The BiggerPockets Rental Property Calculator is a vital tool for real estate investors looking to analyze the potential profitability of an investment property. It helps you move beyond simple gut feelings and provides a data-driven approach to decision-making by considering various income streams and expenses associated with rental property ownership.
How the Calculation Works:
The calculator estimates your Monthly Cash Flow, which is the net income you can expect to receive from the property each month after all expenses are paid. The core formula is:
Monthly Cash Flow = Monthly Rental Income – Total Monthly Expenses
Let's break down how each input contributes to this calculation:
Income Calculation:
Monthly Rental Income: This is the gross income you expect to collect from tenants. The calculator adjusts this for vacancies based on your provided Vacancy Rate (%).
The monthly mortgage payment (P&I) is calculated using the standard mortgage payment formula:
$M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]$
Where:
M = Monthly Payment
P = Principal Loan Amount
i = Monthly Interest Rate (Annual Interest Rate / 12 / 100)
n = Total Number of Payments (Loan Term in Years * 12)
Property Taxes: Calculated as a percentage of the purchase price annually, then divided by 12.
Other Expenses: (Not explicitly in this calculator but important to consider) This could include utilities (if not paid by tenant), vacancy costs beyond the rate, capital expenditures (e.g., new roof, HVAC replacement), etc.
Putting It All Together:
The calculator sums up all the calculated monthly expenses and subtracts them from the adjusted monthly rent to arrive at the estimated monthly cash flow.
Deal Screening: Quickly filter potential investment properties to see if they meet your basic cash flow criteria.
Offer Negotiation: Understand the financial implications of different purchase prices and renovation budgets.
Financial Planning: Project the potential income from a rental property portfolio.
Risk Assessment: Identify potential costs and how they impact overall profitability.
By using this calculator, investors can make more informed decisions, increase their chances of success, and build a more profitable real estate portfolio.
function calculateInvestment() {
var purchasePrice = parseFloat(document.getElementById("purchasePrice").value);
var renovationCosts = parseFloat(document.getElementById("renovationCosts").value);
var downPaymentPercent = parseFloat(document.getElementById("downPaymentPercent").value);
var loanInterestRate = parseFloat(document.getElementById("loanInterestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var monthlyRent = parseFloat(document.getElementById("monthlyRent").value);
var vacancyRate = parseFloat(document.getElementById("vacancyRate").value);
var propertyTaxesPercent = parseFloat(document.getElementById("propertyTaxesPercent").value);
var insurancePercent = parseFloat(document.getElementById("insurancePercent").value);
var hoaFees = parseFloat(document.getElementById("hoaFees").value);
var repairsMaintenancePercent = parseFloat(document.getElementById("repairsMaintenancePercent").value);
var propertyManagementPercent = parseFloat(document.getElementById("propertyManagementPercent").value);
// Input Validation
if (isNaN(purchasePrice) || purchasePrice <= 0 ||
isNaN(renovationCosts) || renovationCosts < 0 ||
isNaN(downPaymentPercent) || downPaymentPercent 100 ||
isNaN(loanInterestRate) || loanInterestRate < 0 ||
isNaN(loanTermYears) || loanTermYears <= 0 ||
isNaN(monthlyRent) || monthlyRent <= 0 ||
isNaN(vacancyRate) || vacancyRate 100 ||
isNaN(propertyTaxesPercent) || propertyTaxesPercent < 0 ||
isNaN(insurancePercent) || insurancePercent < 0 ||
isNaN(hoaFees) || hoaFees < 0 ||
isNaN(repairsMaintenancePercent) || repairsMaintenancePercent < 0 ||
isNaN(propertyManagementPercent) || propertyManagementPercent 100) {
document.getElementById("result-value").innerText = "Invalid Input";
return;
}
// Calculations
var totalAcquisitionCost = purchasePrice + renovationCosts;
var downPaymentAmount = totalAcquisitionCost * (downPaymentPercent / 100);
var loanAmount = totalAcquisitionCost – downPaymentAmount;
var monthlyInterestRate = (loanInterestRate / 100) / 12;
var numberOfPayments = loanTermYears * 12;
var monthlyMortgagePayment = 0;
if (loanAmount > 0 && loanInterestRate > 0 && loanTermYears > 0) {
monthlyMortgagePayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else if (loanAmount > 0 && loanInterestRate === 0) {
monthlyMortgagePayment = loanAmount / numberOfPayments;
} else {
monthlyMortgagePayment = 0; // No loan or zero term/interest rate means no mortgage payment
}
var adjustedMonthlyRent = monthlyRent * (1 – vacancyRate / 100);
var monthlyPropertyTaxes = (purchasePrice * (propertyTaxesPercent / 100)) / 12;
var monthlyInsurance = (purchasePrice * (insurancePercent / 100)) / 12;
var monthlyRepairsMaintenance = (purchasePrice * (repairsMaintenancePercent / 100)) / 12;
var monthlyPropertyManagement = monthlyRent * (propertyManagementPercent / 100) / 12;
var totalMonthlyExpenses = monthlyMortgagePayment + monthlyPropertyTaxes + monthlyInsurance + hoaFees + monthlyRepairsMaintenance + monthlyPropertyManagement;
var monthlyCashFlow = adjustedMonthlyRent – totalMonthlyExpenses;
document.getElementById("result-value").innerText = "$" + monthlyCashFlow.toFixed(2);
}