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Calculate the Net Profitability of your Rental Income Property

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Buying a real estate property with the goal of renting it is a common investment that can insure a constant cash flow of income. However, even though it is a popular type of investment, when looking at the numbers, it is actually comparable to any other type of investment such as the stock market, government titles or other business project.

The following simulator will help you calculate the potential financial outcome of your investment property (net of taxes) which could then be used to compare it to other investment opportunities. However, this calculator cannot measure more qualitative aspects such as the relevant expertise required to run the business, which could favor this form of investment over others.

< Read the rest of the introduction to this calculator

Please change the suggested values with your own amounts in the blue text boxes.

Help with our calculators Help

Evaluate your real estate investment:

Purchase of Rental Property

Total purchase price of rental property
Purchase price of land Help If unknown, use 10% of the total amount.
Purchase price of the building (excluding land)	$
Capital improvements to property (renovation value) Help The additions or improvements will be added to the property's value.

Other acquisition costs Help Transfer tax, notary, legal fees, etc.
Cash invested Help The amount can include the disbursement made to buy the business (based on the evaluation of the future cash flow), the cash down on the mortgage balance and the additions or improvements to the property.
Annual appreciation or depreciation of the property	%

Mortgage

Mortgage balance
Loan term (years)	Max: 50
Interest rate	%

Rental Income

Annual rental income Help Take into consideration the credit risk and empty units. A landlord will rarely collect 100% of the rent from all his units.
Annual income from other services Help Other service costs include parking, energy, telecommunication, etc.
Annual increase of rent and other services	%

Annual Current Expenses

Licenses and property taxes
Repairs and maintenance
Insurances
Utilities Help Electricity, plumbing, gas and water.
Others Help Salaries and fees: legal and accounting, telecommunication, publicity, real estate agent, etc.
Inflation on current expenses	%

Type of depreciation on real property Help

Taxes on gross income

Final Expenses on Property Sale

Realtor fees	%
Mortgage closing cost
Other costs of sale
Taxes on capital gain	%

Financial Analysis

Profit & Cash Flow from Rental Property

Duration in years of the analysis	(0-50)
Gross rental income	$
-[+] Total current expenses Help Current expenses are tax deductible.	$

-Taxes	$
Net operation profit Help Those are the profits shown on the financial statement.	$
-[+] Total capital expenses Help Capital expenses are non-deductible from taxes, but amortized.	$

Depreciation Help The depreciation is not a real cash outflow, so we add it on the total cash flow.	$
Total cash flow from rental income	$

Sale of the property at the end?
[+] Net profit from real estate resale	$

[+] Equity on the property Help

-Total expenses on property sale	$
-[+] Taxes on property sale	$

Net Cash Flow

Rate of Return on Investment

Initial Investment & Cumulated Profits

Initial investment	$
Cumulated profits	$

Net present value (NPV) & internal rate of return (IRR)

Annual rate of return on cash flow Help Rate of return you require on the annual cash flow. To get the Internal rate of return, find the rate that brings the NPV to 0.	%
-Initial investment	$
Present value of cash flows Help Value of all future cash flow, discounted from the year it will be cashed, at the required rate of return.	$
Net present value Help Sum of all future cash flow, discounted from the year it will be cashed, at the required rate of return) minus the initial investment. If it is positive, it is a profitable investment. If it’s negative, you should have invested somewhere else at that rate of return.	$

When Will You Reimburse your Initial Investment?

Cash flow	(years)
Net present value	(years)

Progression Chart of Cumulated Cash Flow & Net Present Value

Progression Chart of Annual Cash Flow Flow & Net Present Value

Complete Analysis

For a more detailed view, here are all the numbers for every year of the analysis:

Mobile users: you can scroll the table horizontally

Year	Net profit Help Those are the profits shown on the financial statement.	Annual cash flow Help The depreciation is not a real cash outflow, so we add it to the annual cash flow.	Cumulated cash flow	Present value	Net present value

Other pages that might interest you:

Intro to "Estimate your Home Value Appreciation and the Profits from its Future Sale"

Intro to "House Flipping; Calculate your Net Profit"

Intro to "What Is the Home Value You Could Afford?"

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Numbers in our calculators are rounded to two decimals.
The same calculations made in an Excel spreadsheet may differ slightly.

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-Interests on mortgage	$
-Operation expenses	$
-Depreciation	$