Rental Property Calculator

[Elizabeth Roberts]

Hi all. I have been using the Rental Property Calculator. This has been tons of fun and bringing me lots of vitality each day. I am running numbers on a variety of properties each day. 

My questions are:

1) How is the Annualized Total Return calculated?

2) How is the CoC ROI calculated? Does this change over the years based on possible rent fluctuations?

3) If the property has a negative CoC ROI initially but ends up at say 8%, is that a potentially smart investment?

Thanks so much!

[Aaron W.]

@Elizabeth Roberts Great to see your excitement with real estate! Your next step is to jump in!

1) The Annualized Total Return in the BP calculator is more or less the Total Profit If Sold (Property Value at year of sale minus Sales Expense and cash invested) plus the total cash flow gained each year divided your total cash invested divided by the number of years you own the property. It's a little bit more complicated than that, but that is the general gist. 

2) CoC ROI is calculated by taking the total cash flow for a given year and divided by the total cash you have invested. Rent collected can change the number. All things remaining equal, if you have more rent coming in then your cash flow should be higher, vice versa.

3) What is considered a good or bad CoC is personal preference. It depends on your why in investing and the goals you have. Some may see 8% as a good return on their money based upon their goals while others may only see 15% or 20% CoC as a good return.

Have a great day!

[Elizabeth Roberts]

Thank you so much for your time with this AJ! Your generosity is totally appreciated

! Enjoy the weekend!