A lot of factors drive the profitability of any given property. Every time you look at a specific property in the Rental Property Calculator database, the system will prepare a pro forma based on YOUR assumptions. It is important to understand how a property fits into the surrounding neighborhood, the cash required to purchase, how the property will perform on a monthly basis, and how it will perform over time considering factors such as vacancies, inflation and appreciation.
Is it possible to make money on a property that loses each month? Study the sample pro forma below and see for yourself! This property will have negative cashflow of $1,715 in the first year, yet the total financial benefit in the first year is $4,409.
Fig 4. The Rental Property Calculator Network finds the properties that will work. You set up assumptions to run scenarios and analyze the potential performance of the property. Members can save properties to their personalized homepage for future review or purchase. The bottom line for each property is the multi year ROIC (550% in this example). Make sure you are confident in the numbers that support the ROIC by drilling into the line items (Fig 5).
