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Using Rental Property Cash Flow Calculator Excel


Real estate investing requires lots of research. It can be made easier with a rental property cash flow calculator in Excel or, better, Mashvisor.

To make your investment worthwhile, you need to estimate its profitability. You must study the market to understand whether there’s demand for rentals in a neighborhood. Then, you need to run a series of calculations to estimate the cash flow and cash on cash return for each investment property you’re considering.

Table of Contents

  1. How to Analyze the Cash Flow of a Rental Property
  2. Pros and Cons of Using Excel for Calculating Rental Property Cash Flow
  3. Where to Find a Reliable Rental Property Cash Flow Calculator
  4. Rental Property Cash Flow Calculator: Excel or Mashvisor?

In this article, we will give you a step-by-step guide to running real estate analytics. We will also walk you through the pros and cons of using MS Excel for property cash flow calculations and show an alternative to Microsoft’s spreadsheet program.

How to Analyze the Cash Flow of a Rental Property

Before we talk about the methods used to analyze the potential financial performance of an investment property, let’s talk about methodology. Estimating the cash flow of a rental property takes prior research if you want to end up with a correct rental estimate.

Follow the steps below, and you’ll obtain a pretty accurate impression of the potential cash flow.

Total Value of the Property

The first thing you need to know is the total value of the property. The property value is not immediately used to calculate cash flow. However, it is very helpful when you need to put the cash flow of the property in context.

It can differ from the asking price, too. In some cases, you can get the sale value down. In others, you may need to bid against other buyers, which can drive the figure up. If the difference is massive, it can impact the ROI of the property and make or break an investment.

While you can’t know exactly how much you’re going to pay for the rental property, you can look at different scenarios. Run the numbers with the base asking price, a discount, and a markup. It can show at what cost the property becomes unprofitable so you can stop bidding.

Upfront Investment

The total value is an important figure to calculate ROI. However, you want also to estimate the total cash investment to calculate the cash on cash return. Since most real estate investors don’t pay the entire price of the property upfront and finance their investments instead, the estimated ROI may not be showing you the entire picture.

The cash on cash return shows how annual cash flow is related to the total investment, which typically includes the cash paid for the down payment and renovation cost.

Calculating the upfront cost is crucial to understanding how profitable your rental property can be. You should include the following expenses when estimating upfront costs:

  • Home loan deposit, as per conditions of your lender
  • Legal fees
  • Agent fees
  • Property inspection fees
  • Taxes
  • Property insurance
  • Renovation cost

Most of the above expenses vary significantly from state to state and from lender to lender. Some types of loans, for instance, allow incorporating renovation costs into the loan. It makes the upfront cost much lower.

Being able to do the job yourself with a couple of renovation tips can also cut down on the costs, so does getting a lower down payment percentage from your bank.

Related: How to Stick to a Rental Property Renovation Budget

Rental Expenses

The most important data you need to calculate cash flow is monthly or annual rental expenses. They are the costs associated with leasing the property, such as:

  • Maintenance
  • Utilities
  • Mortgage payments
  • Rental management fees
  • Tenant screening
  • Broker fees
  • Business licensing fees

The costs mentioned above also depend on the area you’re purchasing a rental property in. Some states and counties require short-term rental owners to obtain licenses. Property managers in different states may charge vastly different rates. Regular maintenance depends on the type of property you own, the form of rental, and local labor costs.

To get more insight into the associated costs, you need to talk to local providers or, at the very least, check out their websites for pricing.

For instance, if you’re purchasing a property with well-developed landscaping, expect to pay a professional to trim all the plants at least bi-monthly. Check a couple of local landscapers’ websites for general pricing and add an average price to the list of monthly expenses.

Apart from the monthly rental expenses, such as mortgage payments, you also need to research annual costs. They include property taxes or scheduled repairs. For instance, if you know that the plumbing must be replaced in five years, break the quote from a local plumber into five parts and add it as an annual expense.

Importantly, don’t underestimate the costs of renting out a property. A projection that comes off as too optimistic leads to a skewed cash flow estimate. It’s best to assume the worst-case scenario for repairs. In case the cash flow still comes out positive, you’re looking at a good investment.

Average Rent in the Area

Understanding the rent dynamics in the neighborhood where the rental property is located is an important piece of the puzzle. It’s difficult to know what sum you’ll settle on with a potential tenant. However, assuming you’re charging a market rate, analyzing the rent prices in the general area should do the trick.

You can do it by browsing through websites like Craigslist or Zillow for long term rentals and Airbnb for short-term rentals. It can be hard to arrive at an average rent, though.

Another variable that’s hard to predict on your own is the vacancy rate. If it’s high in your preferred neighborhood, your property may lose money both in direct lost income and in broker and tenant screening fees.

The alternative to trying to analyze the market on your own is using Mashvisor’s real estate market analytics. Mashvisor collects historical data across the US to present users with accurate and up-to-date average rental pricing.

Calculate Cash Flow

Now that all the necessary data is gathered, you can start building your rental property Excel spreadsheets.

The first step in the process is calculating the cash flow or net annual profit from the property. The basic formula is quite simple; you just subtract annual expenses from gross annual rental revenue. It’s estimating what your annual expenses are going to look like that’s the difficult part.

Suppose you charge $1,200 monthly in rent. You also expect to spend $500 on the mortgage and $350 on other associated fees like landscaping, cleaning, and rental management. After doing the calculations, you’re left with an annual cash flow of $4,200.

Calculate Cash on Cash Return

Some people who want to create a rental property cash flow calculator in Excel prefer to view cash flow as a percentage of the cash investment. The metric is called cash on cash return and can be very useful in understanding whether the cash flow of the property is good or not.

Generating a substantial cash flow is nice, but it won’t mean anything unless it’s decent in the context of your cash investment. The same cash flow of $4,200 can be decent or poor, depending on how much money you’re planning to invest.

To calculate cash on cash return, divide the pre-tax annual cash flow by the total cash investment. You can do that in Excel or a specialized cash on cash return calculator.

If the rental that yields $4,200 annually costs $400,000 and you’ve managed to pay 12% of that sum upfront, it provides a good return. With $48,000 paid upfront, the return is 8.75%, which is considered good.

However, if, due to higher fees, taxes, or the need to renovate, you end up investing $80,000 in cash, you’re only receiving a 5% cash on cash return.

Related: What Is a Good Cash on Cash Return?

Pros and Cons of Using Excel for Calculating Rental Property Cash Flow

While the amount of data you need to gather for a realistic estimate of a property is vast and hard to obtain, calculating the core metrics is quite straightforward. You can easily run all of them through MS Excel or Google Sheets.

But is it the most convenient method? Let’s find out.

Why You May Use Excel for Real Estate

One of the biggest benefits of using a spreadsheet to analyze rental properties is that it’s free. Surely, a desktop license of the program comes with a cost, but it’s not specialized real estate software, and you probably already own it for personal or business needs. Even if you don’t, the web version is completely free.

Since Excel is just a spreadsheet, it can be tailored to your specific needs to run any type of calculation or store any type of data. If you’re running some kind of advanced analytics and looking at lots of data to analyze, creating a rental property cash flow calculator in Excel may be the easier option.

Even if you’re not an advanced user, Excel is still extremely effective for comparing multiple properties. Run cash on cash return calculations on several properties you’re considering purchasing, and compare them on a graph. It’s a fast and easy way to visualize your investment opportunities and make a decision.

Reasons to Look Into Alternatives

Even though MS Excel is a good choice for real estate analytics, it’s not perfect. One part of the problem is the need to set up an analytics spreadsheet. If you only need to run the numbers on a couple of rentals, you probably don’t want to spend much time learning the ropes of Excel.

But that’s not the biggest problem. Excel is good for analyzing data, but without the right property data, it’s practically worthless. Gathering that data in one location can take days of online research and calls. If you’re considering different states or counties for investment, expect the time needed to do the research to be much longer.

Where to Find a Reliable Rental Property Cash Flow Calculator

Creating a rental property cash flow calculator in Excel is a valid option, but it’s not perfect. What can you use instead?

Why Not Just Use Excel?

The biggest issue with using Excel to estimate rental property cash flow is that it’s only a framework for analyzing data. That’s why it’s free. Looking up market data on your own can potentially take days of work, and it’s not guaranteed to be 100% accurate. Hiring a real estate data analytics company can set you back thousands of dollars.

It’s the correct data that is the most valuable thing in real estate ROI calculations. That’s why using Excel and your own research can potentially mean making the wrong investment.

What is Mashvisor Rental Property Calculator?

A solid alternative is using Mashvisor’s rental property calculator. Mashvisor’s tool runs all the standard ROI calculations, but it gives you much more than that.

With Mashvisor, you’re basing your ROI and cash flow estimates on fresh market data from the platform’s rental property analysis. The data is based on tens of thousands of sale and rental listings from across the US.

It means you’re not guessing the vacancy rate, average rent, or taxes in the neighborhood. You know them. As a result, the estimates are much more realistic, and you run much lower chances of getting yourself in a raw deal.

Mashvisor is not just a rental calculator powered by market data. It’s an all-around real estate tool that lets you make better investment decisions. Here’s what’s included:

  • Explore property listings with core metrics pre-calculated
  • Find the best short-term rental markets
  • Find the best investment property
  • Understand local real estate markets
  • Analyze in detail and compare multiple properties
  • Save the best ones and get access to seller contact info

Related: Rental Property Calculator: What Is It For?

Rental Property Cash Flow Calculator Excel - Mashvisor's Rental Property Calculator

Mashvisor’s rental property calculator allows investors to obtain cash flow and ROI estimates based on up-to-date market data.

How Much Does it Cost?

Mashvisor’s Standard Plan only costs $49.99 per month. The plan doesn’t just provide a handy real estate calculator powered by the latest market data but directs you to the most profitable properties.

If you only need a calculator and a dataset of Mashvisor’s market research, that’s $17.99 per month.

You can sign up for a 7-day free trial to see how Mashvisor works before committing to a full subscription.

Rental Property Cash Flow Calculator: Excel or Mashvisor?

Creating a cash flow calculator is not just about the formula. It’s mostly about the data you use.

Some of that data is very specific to you and the deal you’re able to get — a lower rate from a rental management agency, for instance. Other data, like vacancy rate in a specific neighborhood, can only be derived from market research. The tool used to calculate cash flow is not as important as the data it uses.

Both the Excel and Mashvisor calculators are useful in their own ways. Excel is an excellent way to run a very basic cash flow calculation or work with your own reliable database.

Mashvisor is equally advantageous for novice investors and experienced real estate agents who don’t use a proprietary database. The platform provides all the data you need to estimate cash flow on multiple rental properties accurately. It also offers resources to run other important rental income predictions.

Still not sure about it? Schedule a demo to receive a detailed explanation of how Mashvisor works.

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