Sunday, May 08, 2005

Rental house investment calculator

I created this calculator with Excel yesterday (shouldn't I be studying or running? yes).

It is more or less a rental property income/appreciation analyzer.

You can change the variables in blue.

Its not very clean and user friendly, but it gets the job done.


Anonymous Anonymous said...

Just out of curiosity why haven't you considered the maintenance costs that will surely be involved with running a rental unit? If you are living in the house yourself then, yeah, you can cut some corners but when you are renting the house(s) out to someone else then there will be annual costs associated with such an enterprise. And since these costs are unknown you can't really be sure how much profit you will make in the first 5 years. For instance you may have to replace the roof, plumbing, electrical work, etc. Most of these jobs when done correctly will last the house for years but if you have ten houses then the costs will add up very quickly. And this doesn't take into considertion all the damage that your tenants will cause. And even though you may be able to get the money out of them you most likely will have to front the bill for a while. So, what would you consider to be a fair amount for maintenance expenditures that should also be added to your calculator?

Wed May 11, 02:25:00 PM EDT  
Anonymous Anonymous said...

Thanks for the comment. There is an expense variable on the right of the spreadsheet. I think I had it set at $300 per month. I'm not surprised that you missed it, I didnt make it user friendly.

Maintenance cost depends on the house. $300 is quite high (and factors in a 10% vacancy rate), but I am conservative. (I currently have one rental property...the tennants are responsible for maintenance, not me)

Note, why stop at not being able to estimate expenses accurately, I am also estimating everything else on there.

I was missing one variable though. I didn't add in a column for depreciation. This would GREATLY increase your return...but I don't yet understand how it applies to rental I left it off.

If you are worried about tenants destroying your house, then you need to rethink your screening process...(and increase the deposits you are asking for).


Wed May 11, 03:18:00 PM EDT  

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