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Rental Income Calculator Explained

Item ID#:2454786Location:
Seller ID#:571214 Views:

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A rental income calculator consists of nothing more than figuring
out what is coming in to your rental business and what is going out.
While it involves simple concepts, incorrect research, estimates or lack
of preparation for the future could spell disaster for your rental
business.To figure out whether your property is going to make you
a profit or not you need to first figure out what kind of revenue the
property is going to generate. This is your gross income and will be the
first thing in your rental income calculator. Simply take all money
earned from the property and total that up. Rents, application fees,
late fees and any other money made should be considered here.You
can base this number off actual historical figures if they are available
or you can estimate them. By simply taking all rents and other sources
of income due you come up with your gross potential income. Remember
this is not necessarily what you will make; it is only your "best case
scenario".If estimating gross income, make sure to account for
vacancies and uncollected rents. This will help you get your gross
operating income number. These rates depend on the local market and your
tenants, but let's use 5% of gross potential income for this example.
Take your gross potential income and multiply it by .05 and subtract
that number from your gross potential income to end up with your gross
operating income.Next in the rental income calculator is going be
costs. We need to tally up our expenditures to see what is going out of
your business every month. Your mortgage payments will the biggest
cost. After that include taxes, insurance, advertising costs, tenant
acquisition costs, repairs, maintenance, and any utilities you plan to
pay. Again use historical data is possible but make sure you plan for
the unexpected by putting aside 1% of the purchase price for repairs and
maintenance every year.Take your gross operating income and
subtract your costs to get your net income. This is the result of your
monthly cash flows, which also accounts for vacancies and uncollected
rents.As with anything, this rental income calculator simply
takes all available information, combined with estimates to provide an
idea of may happen with your rental business. Be prepared with extra
cash or credit to deal with any unforeseen event that may affect your
rental business.You can also tweak the formula to see what
changes in your operating procedures will do to your bottom line. If
you're estimate is unprofitable consider putting a larger down payment
on the property to lower the mortgage, raise the rent or decrease costs.

If you want to learn more about rental
income calculator and how to invest in commercial real estate,
request your free copy of the 5-part video series "Commercial Real Estate Investing
For Beginners."You'll learn how to find, analyze, and fund
commercial real estate deals, just like the members of The Real Wealth
Company do!
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10/5/2015 4:54:53 AM UTC