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Top 10 Real Estate Financial Calculator Problems Explained w/Spreadsheet

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Real estate investors use a variety of mathematical tools to analyze the performance of their investment properties. We've taken some of the most popular ones and explain their purpose and how to do these real estate investment calculations.

Once you've learned about them, download the spreadsheets. One is the Real Estate Investment Calculator Sheet, and the other is the same sheet with sample data in it to show you formats.

1. Gross Potential Income

A lease sign is posted on one of the towers at the Parkmerced apartment complex May 26, 2010 in San Francisco, California.
Justin Sullivan / Getty Images News/Getty Images
Gross potential income is the expected income a property will produce without deductions for expected vacancy or credit loss.

Gross Potential Income calculation explained here.

2. Gross Operating Income

This calculation takes into account losses due to vacancy and non-payment.

Detail of the Gross Operating Income calculation.

3. Gross Rental Multiplier

Though not the most precise of tools, the GRM can give you a quick comparison tool to decide on whether to do a more thorough analysis.

Get Gross Rental Multiplier help here.

4. Net Operating Income

Here we throw in the operating expenses, such as management, repairs, janitorial, etc. for our NOI.

Net Operating Income calculation explained here.

5. Capitalization Rate

By using other properties' operating income and recent sold prices, the capitalization rate is determined and then applied to the property in question to determine current value based on income.

Capitalization Rate Calculation explained.

6. Cash Flow Before Taxes (CFBT)

We take net operating income and subtract capital cash expenditures as well as debt service, add back loan proceeds and interest income.

More on Cash Flow Before Taxes.

7. Cash Flow After Taxes (CFAT)

This one is easy, as it's the CFBT with taxes subtracted.

Details on Cash Flow After Taxes.

8. Break-Even Ratio

Add Debt Service to Operating Expenses and divide by Operating Income.

More on Break-Even Ratio

9. Return on Equity - Year One

This is the percentage return on your cash investment the first year.

More on Return on Equity

10. Get the Real Estate Investment Calculator Sheets Here

Real Estate Investment Calculator Spreadsheet

Sample Sheet With Data Entered

11. Join The Real Estate Investment Forum

We now have a forum for real estate investors to discuss strategies, share knowledge and have fun talking real estate investment.

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