Working An Investment Property Mortgage Calculator To Your Advantage

Posted on: May 27, 2012

Categories: Buy, Profit

Author: Buy Fix and Profit (Guest)

Property investment is exciting and can bring financial rewards. While any investment property is a potential profit-earner, being able to determine if it is going to be profitable or not is crucial. No one wants to invest in a piece of property that keeps you losing money each month because the property expenses are more than what it’s gaining. So, the best way to evaluate your potential investment property is through the use of an investment property mortgage calculator.

investment property mortgage calculator Working An Investment Property Mortgage Calculator To Your Advantage

Photo Courtesy of Dale Dugdale of rentvine.com via Flickr

An investment property mortgage calculator can assist you in the following ways:

  • It can show you the many probable outcomes of your investment
  • It can provide you a fair financial analysis of your potential investments through the use of complex mathematical equations
  • It can show you your routine mortgage and upkeep costs
  • It can give you an idea of your income and tax considerations for the property

How does an investment property mortgage calculator work?

As said, an investment property calculator is a great tool for determining if your potential investment property will be profitable so you no longer have to rely on generic market forecasts or realty market experts or even go by your hunch. This is because mortgage investment calculator software are designed to process complex mathematical calculations. It processes both positive and negative values of your property such as income, taxes, and payments to even determine how much rent you will need to charge your tenants. Of course, you will need to input some important information in order for the calculator to be able to run you a result. These bits of information include:

  • Your monthly rental income
  • Your monthly loan repayment costs associated with any financing you have on the property
  • Your operating expenses in maintaining the property each month

From all of the information you have entered, the calculator will then give you rough estimates of your:

  • Monthly cash flow
  • Annual building tax deductions
  • Any changes in the amount of taxes you will be paying on the property

Limitations of an investment property mortgage calculator

Some limitations of mortgage calculators you need to be aware of is that most calculators assume that your expenses are the same each month over any given year, which is not the actual case. For instance, if you’ve made some improvements on the property on a certain month, naturally the figures would be inaccurate because the expenses would not reflect unless you manually enter it. So obviously, you must update data as well to ensure accurate results.

It is important to understand that while an investment property mortgage calculator can be a very valuable tool for you to use, it does have some limitations such that mortgage calculators would not see any rebates you might receive, or any tax deductions which you may be eligible to claim. Again, calculators are simply tools that depend on human intervention in order to process information. As always, consulting with professional tax accountants when necessary will be another option.

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