The returns calculator runs the numbers on a rental property before you make an offer. You enter the price, loan, rent, and expenses, and it shows your monthly cash flow, cash on cash return, cap rate, and what the deal earns over the years you hold it.
Open the calculator
Open any property, click the three dots next to Add to, then Calculate returns. If the property has no saved reports yet, you can also click Calculate returns in its Reports section.
Use Next and Prev to move between the five steps, then click Finish to see your results.
Step 1: General info
Give your report a name. The property's address, type, and market status fill in for you.
Step 2: Purchase & Loan details
Purchase price: what you plan to pay. The Estimated price beside it is the property's estimated value, for reference.
Closing costs: a percentage of the price.
Point charged: points on the loan, as a percentage.
Improvement costs: work needed before you rent it out. Tick Improvements Included In Loan? if you're financing it.
Down payment: a percentage, with the dollar amount shown beside it.
Interest rate and Loan term (in years).
To get you started, closing costs and points are set at 2%, the down payment at 25%, the interest rate at 7.04%, and the loan term at 25 years. Change any of them to match your deal.
Buying with cash? Tick Cash purchase (no loan) and the loan fields go away.
Step 3: Income
Rental Income is the monthly rent. It often fills in from the property's rent estimate, which is the typical rent for the area and home size. If it's blank, or you expect a different rent, type your own number.
Add any Other Income, such as parking or laundry, per month.
Step 4: Expenses
Property taxes: per year. It fills in from the property's tax record.
Insurance: per year. It starts at $1,200.
Management fees: a percentage of monthly income. It starts at 10%.
Water/sewer, Electric, Gas, HOA/Association Dues, and Other Expenses: per month.
Step 5: Reserves & Assumptions
Repair & Maintenance, Vacancy Loss, and Capital Expenditures: each a percentage of monthly income, starting at 5%. Vacancy Loss goes up to 10%.
Appreciation Rate, Rent increase Rate, and Expenses increase Rate: per year, each starting at 2%.
Hold period: how many years you plan to keep the property. It starts at 10.
Closing costs and Sales commission for when you sell: percentages of the sale price, starting at 2% and 6%.
Your results
The top of the results page shows your Monthly Cash Flow, Total Cash Invested, and Monthly Mortgage Payment. Below that:
First Year Returns: net operating income, cap rate, DSCR, cash flow, cash on cash, principal paid down, appreciation, and total return.
Sale Scenario: the sale price at the end of your hold period, what you'd walk away with, your total return, and IRR.
Purchase Details: the total you'd pay and the cash you'd need, including the 1% rule and loan to value.
Your income and expense breakdown, and two charts: Cash Flow Over Time and Equity Accumulation.
Move the sliders for purchase price, down payment, interest rate, loan term, appreciation rate, and hold period, and every number updates as you go. Edit Calculation takes you back to step 1 with your numbers.
How the main numbers work
Monthly cash flow: your monthly income, minus operating expenses, reserves, and the mortgage payment.
Net operating income (NOI): your yearly income after operating expenses and reserves, before the mortgage.
Cap rate: NOI divided by the purchase price.
Cash on cash: annual cash flow divided by the cash you put in. That cash is your down payment, closing costs, points, and improvement costs (unless you financed the improvements).
Total return (first year): annual cash flow, plus the loan principal you paid down, plus one year of appreciation.
Save your analysis
Click Save Report to keep the analysis on the property. It shows in the property's Reports section, where you can view, edit, or delete it. Each time you save, you get a new report, so delete any older version you don't need.
Click Download PDF to save a copy to your computer.
Need more help?
Email info@theinvestnest.com or use the chat bubble in the app.