Leveraging an Investment Calculator for your Real Estate Holdings

Real estate investors need to be able to quickly calculate the critical measurements or metrics needed when buying, selling or managing property. Investment calculators combined with business software can help an investor keep track of expenses and profits.


One of the most important metrics used to evaluate real estate is the Capitalization Rate or Cap Rate. The investor needs to know the property cost, the current value of the property if it is different from the cost, and the property’s net operating income. Net operating income, or NOI, is the annual rental income less the operating expenses. The Cap Rate is calculated by dividing the NOI by the cost of the property. If the NOI of a given property is $12,000 and the purchase price of the property was $120,000, then the Cap Rate is 10%. If the property was purchased several years ago and it has appreciated to $240,000, use of the property’s current value instead of the original cost would more accurately reflect to the owner the opportunity cost of the investment. Use of the current value would show that the investor has a property worth $240,000, NOI of $12,000, and a Cap Rate of 5%.

When evaluating a property, an investor should also closely review cash flow projections and financing terms. Simply put, the cash flow has to be sufficient to handle payments on the debt and the expenses related to the property. Business software can help an investor track and control expenses and plan for any future expenditure. Software can also be used to generate profit and loss statements. As every investor will manage a particular property in an individual way, the return for every investor will be slightly different. Investment calculators can be used to calculate an investor’s IRR or internal rate of return for each property.

Investment calculators and business software can be used by any real estate investor to save time and track expenses and profits.