The Mesa Companies Investment Property Calculator An investment property can be an excellent investment. This calculator is designed to examine the potential return you might receive
from an investment property.
Definitions
- Cash Invested
- The money, you the investor, actually have to put down on the property. (out of pocket). Usually it is the amount of earnest money you invest in property.
- Interest Rate
- The amount of interest the investor pays annually to borrow money from the lender. Rates and programs can vary, check with lender for more information.
- Land Value
- The approximate value of the land that the property sits on. Usually available on the tax records in the county the property resides. You can not deprecate land value.
- Personal Property
- Anything that you have that is used for the investment property, such as washer/dryer, range, refrigerator lawn equipment, fixtures and other.
- Personal Property Depreciation Rate
- The rate annually you can depreciate on the personal property.
- Building Value Depreciation Rate
- Recovery period for five-year personal property.
| Year | Percentage |
|---|
| 1 | 20% |
| 3 | 14.20% |
| 5 | 11.52% |
| 2 | 32% |
| 4 | 11.52% |
| 6 | 5.76% |
- Appreciation
- The amount the property is on an annual basis appreciation occurs on entire value of the property
- Loan P & I
- P=principle, I=interest
- Total Depreciation
- Total amount you can depreciate annually on personal property and building value.
- Gross Operating Income
- The amount of income available after vacancy.
- Total Annual Operating Expense
- The total annual expenses including real estate tax, repairs, management fees, insurance, utilities, supplies, and other miscellaneous expenses.
- Operating Expense Ratio
- It's the percentage amount- based on the income 23 - 30% is considered average.
- Net Operating Expenses
- Total annual amount of expenses.
- Cash Flow Before Tax
- What's left after expenses, principle payment and interest.
- Annual Debt Service
- Your payment to lender including principal and interest.
- Equal Principle Reduction
- The amount left annually as you pay down the principle and interest.
- Return on Investment w/appreciation
- Cash flow before tax + principle reduction + taxes saved/paid + appreciation divided by cash invested. Includes appreciation.
- Return on Investment w/ out Appreciation
- Does include same formula above except appreciation.
- Cap Rate
- AKA= Net operating income divided by price, capitalization rate, rate of return- Anything in Double Digits is Fantastic!
- Cash on Cash
- Cash flow before tax % cash invested.
- Investment Appreciation
- Annual Percentage of increase of appreciation of property.
- Total Return
- The total analyzation of returns of the property.
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