“You should start investing in something for your future.” This is a piece of advice that you often hear from advisers giving clients who ask them about building a foundation for financial freedom and success.
No matter how old you are, if you want a secure future, you should definitely consider investing. The question now is what to invest in.
If you were to check investment options, you will find that there are a plethora of opportunities to pick from. The top choices include pharmaceutical stocks, travel stocks, and restaurant stocks. For you to make money from these investments, however, the COVID-19 pandemic has to end first.
One great investment option, which is even considered recession-proof, is real estate, and now is an opportune time for you to get into it.
Before you go out and start looking for homes to invest in, however, you should first do your research. One thing you need to do is to check if the property you are buying is going to be a sound investment or not. To do this, you should use a real estate investment calculator.
Why Should You Invest in Real Estate Now?
There are lots of reasons why you should get into real estate investment. These include the following:
Property prices are on the decline – Property prices have been going up steadily since 2008. This started dropping slightly in 2017 and even more so after the pandemic hit. If you want to get a great deal on prime property, now is the time to do it. You should invest in real estate while prices are low, they are projected to slowly go up again in 2021.
Mortgage rates are lower – You should also be aware that mortgage rates have dropped considerably this year. If you don’t intend on buying your real estate investment in cash, don’t worry. In fact, according to realtor.com, mortgage rates have been lower than ever at 2.72%. This is for a 30-year fixed-rate loan. If you invest now, you can take advantage of such a rate, which is forecast to go up to 3.4% by the third quarter of 2021.
More rentals will be needed in the coming years – If you invest to create a source of passive income, you are likely to get more bang for your buck. As mentioned earlier, prices are on the decline.
You can then get a decent return on your investment when the economy rebounds in 2021, and people, again, start looking for properties to rent.
What Is a Real Estate Investment Calculator and How It Works
Also called a property calculator, this tool is something you need to use before you buy any property you are planning to rent out.
This tool will help you determine if the home you are checking out is worth investing in. How do you use such a tool? How does it work? Here are some of the basics:
- Input your data – When you use a real estate investment calculator, you will be asked to add the information that the calculator needs. These can include property information, mortgage information, and annual expenses.
- Check output data – Once you’ve added the relevant information the calculator is asking for, you can then see how your investment will stack up. You will see how much money you will need to shell out for the property you’re aiming to invest in and how much income you can expect to make from it.
Once you have all the data you need, you can now make an informed decision on the property you are looking to invest in.
Property Calculator: Main Reasons to Use This Tool
Why is a real estate rental calculator essential when you’re thinking of buying a rental property?
- You get to see off-the-bat how much you can make – Once you know how much you need to spend on a property, you can then determine how much rent you can charge your guests. A rental calculator can help you tweak your rates. With information on cash out, you can adjust your rates to ensure that your property is competitive enough without incurring losses.
- You get to choose which rental property investments to pick – With pieces of information that show you ROI and occupancy rate estimates, you can go into such an investment with your eyes wide open. You don’t have to guess whether or not the property you are considering will make money. The rental home calculator you use will show you the information you need to make the best decision.
Getting information on the property you want to invest in will help you compare it with similar properties in the area.
When you can do a sales comparison analysis, you can better gauge how much you can charge in rental fees for specific properties and how much income could you generate.
How to Use a Real Estate Investment Calculator
Real estate investment calculators come in many different guises. Some require users to input a lot of information on the property they are thinking of buying, while others only have a few lines that you need to fill in.
Take for example one of the most popular property investment calculator options online, the Short Term Rental Cash Flow Calculator.
This rental home calculator helps you determine how much you can make with your Airbnb rentals or other similar properties you want to invest in.
When you use this tool, you will be asked to input information that is pertinent to your rental property. These include daily operating income, projected occupancy rate, and your operating expenses, to name a few.
Once you’re done adding in all the required data the calculator asks for, you can then see useful information. These can help you determine if it’s a good investment to make.
The numbers that you will find at the end of an investment calculator for real estate will let you know whether a property is worth your time and money, or not.
The numbers include your cap rate, cash on cash return, total annual cash flow, and total monthly cash flow. You also get to see your total investment cost, monthly mortgage payments, and annual debt service using this calculator.
To Sum Up
Not everyone who invests in real estate thinks about using a real estate investment calculator. Some tend to wing it based simply on trends and on gut instinct.
Those who want to make sure that they are placing their hard-earned money in a secure investment should consider such a tool, though.
While there are no guarantees when it comes to investing, whether in real estate or any other type of business, being informed is better than being clueless.
Using a calculator will show you the numbers that indicate if you will make money or lose money on a property. This should help you decide whether you should continue with the investment or not.
Starting a business is so much easier when you are well-informed. If you want to find out more about real estate investments and get advice on what you should invest in for the coming year, you should browse our site.
Here you can get a lot of information on investment trends, financial advice, and business tips.