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The Top 8 Real Estate Calculations Every Investor Should Memorize
- Monthly Rent / Total Price of Property. Example:
- Annual Rent / Total Price of Property.
- Net Operating Income / Debt Service.
- Cash Flow / Cash In Deal.
- Operating Income X 0.5 = Probable Operating Expenses.
- Strike Price = (0.7 X After Repair Value) – Rehab.
Considering this, how do you calculate real estate investments?
To calculate the property's ROI:
- Divide the annual return by your original out-of-pocket expenses (the down payment of $20,000, closing costs of $2,500 and remodeling for $9,000) to determine the ROI.
- ROI: $5,016.84 ÷ $31,500 = 0.159.
- Your ROI is 15.9%.
- HP 17BII Financial Calculator.
- HP-30B Business Professional Calculator.
- HP 19BII Financial Calculator.
- HP 12C Platinum Financial Calculator.
- Sharp EL-738C 10-Digit Financial Calculator.
- Casio FC-200V Financial Calculator with 4-Line Display.
- Calculated Industries 3405 Real Estate Master IIIX Real Estate Finance Calculator.
One may also ask, what is the 2% rule in real estate?
The 2% rule says that for a rental property investment to be “good”, the monthly rent should be equal to or higher than 2% of the purchase price. For a $100,000 property, the monthly rent collected needs to be $2,000/month or higher to meet this guideline.
Yield definition Yield calculations are worked out by dividing the annual rental income on a property by how much it cost to buy. For example: Gross yield = annual rental income (weekly rental x 52) / property value x 100.