Should the property be bought? The answer is rarely clear for investors. Fortunately, they have property calculators. A property calculator is a major tool used by investors to decide on a purchase, transfer a loan, refinance, and help decide many other real-estate actions. Why Use A investing in property
? The calculator delivers a number of valuable numbers to encourage or discourage an investor to make a property purchase. Below are five data points that help craft the results.
AS-IS Value: how much is the property worth at this exact moment? Most sellers will want to receive a current valuation, but they may be willing to go lower. This data point allows for an output number for the 30-day return on investment. Different types of ROI’s can be received, such as one for an after-repair or one after retaining the property
as an active rental for a year.
After Market Value: What will the property be worth after everything is fixed up with it? This is an essential data point for determining the return on investments and the annualized cash on cash return. The after market value is not set in stone, so investors may want to do three versions after adjusting the AMV. They can use a low estimate, an average estimate, and a positive "if all goes well" estimate. They can then make a decision based on these ranges, and what the data reflects.
Repair Costs: What is the cost of any major (or minor) repairs? Repairs can be broken down into repairs that make the property investment melbourne livable, cosmetic repairs and preferred repairs if all goes well.
Holding Costs: What does it cost to hold onto the property every month? This information is essential to determining if the property is a viable purchase as a rental. It can be useful to determining the costs of a renovation because an investor may suppose that the renovation will take six months. The holding costs account for taxes, HOA fees, and other considerations.
Expected Rent Roll: This information can potentially be inputted to help determine the ratio to the holding costs. In short, a rent roll of $1,000 can be inputted. The property investment calculator will look at the monthly holding cost total, and deliver the difference.
A successful investor collaborates with property investment companies to find out how accurate these numbers are. The calculator is only a tool. It helps substantiate a decision, but it should not always make the final decision. Property companies can state how realistic the information is, and help support (or argue against) the result of the calculated information.