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4
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2
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Daniel Myers
Pro Member
2
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4
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Rental Property Calculator - Profit if sold Calculation

Daniel Myers
Pro Member
Posted Apr 8 2024, 22:05

I have found a number of other users posted this question in the forum over the years but I cannot find a resolution anywhere.

The way the Rental Property Calculator derives the "Profit if sold" number seems to have an error in it if you are using the function to increase the rental rate and expenses each year. I am new to this and am open to being shown I'm incorrect, but I have finally duplicated the problem with a spreadsheet since it was driving me crazy.

The formula for "Profit if sold" is Property Value - Sales Expenses - Loan Balance - Cash Needed + Cumulative Cash Flow. 

I ran this formulate in a spreadsheet over and over and could not get numbers to match the BiggerPockets calculator. I eventually figured out that the calculator is using the Cash flow rates for the UPCOMING year to calculate the Profit if Sold number. So it is calculating the profit using increased rates for cash flow that has not come in yet.

It's a relatively minor issue, honestly for estimating purposes, most people are probably not going to find this ruining their deals, but I'm a bit obsessive with getting numbers right and this sent me down a rabbit hole tonight figuring it out. 

Is anyone else experiencing this? Here are some other posts I found that seem to reference it:

https://www.biggerpockets.com/forums/48/topics/930230-profit...

https://www.biggerpockets.com/forums/48/topics/537044-rental...

https://www.biggerpockets.com/forums/88/topics/332980-rental...