Purpose of the Real Estate ROI Calculator
This template evaluates residential investment property returns using a streamlined, single-sheet model, much like a comprehensive real estate pro forma template. It functions as a dynamic two-column tool where users enter data on the left to generate financial metrics on the right.
- Calculates immediate cash requirements and long-term profit projections
- Updates metrics instantly based on user-defined financing and operating assumptions
- Eliminates the need for complex SQL queries or multi-sheet navigation
Input parameters
All user-modifiable fields are located in columns A and B of the spreadsheet. These parameters require manual entry of specific property and market data to drive all downstream calculations in the output section.
Acquisition and financing details
- Purchase price: The target buying price of the asset
- Closing costs: Estimated fees associated with the transaction
- Rehab expenses: Budgeted costs for immediate repairs or improvements
- Down payment: Percentage of purchase price paid upfront
- Loan terms: Interest rate and loan duration in years
- Reserves: Initial cash set aside for contingencies
Operating and projection assumptions
- Income variables: Monthly rent and expected vacancy rate
- Expense variables: Property tax rate, annual maintenance, insurance, and other costs
- Holding period: Intended duration of property ownership in years
- Growth rates: Annual percentage increases for appreciation, rent, and expenses
- Selling costs: Percentage of future sale price deducted for agent fees and closing
Understanding the output metrics
The calculated results are located in columns D and E of the spreadsheet. These cells update dynamically whenever input values in the first two columns are modified.
Year 1 financial results
- Total project cost for asset acquisition: Sum of purchase price, closing costs, and rehab expenses
- Total cash invested: Aggregates down payment, closing costs, and rehab
- Net operating income (NOI): Effective gross income minus total operating expenses
- Debt service: Monthly principal and interest calculated via standard amortization formulas
Long-term holding period analysis
- Future sale price: Purchase price compounded by the appreciation rate over the holding period
- Remaining loan balance: Outstanding debt calculated at the end of the holding term
- Net sale proceeds: Sale price minus selling costs and remaining mortgage balance
- Cumulative cash flow: Sum of annual cash flows adjusted for rent and expense growth
Return on investment metrics
- Total profit: Combines net sale proceeds with cumulative cash flow
- Total ROI: Expresses total profit as a percentage of initial cash invested
- Annualized ROI: Approximates the compound annual growth rate of the investment
How to calculate ROI in real estate using this tool
- Enter the property asking price, often informed by a comparative market analysis template, and estimated closing costs in the acquisition section.
- Input financing details including interest rate and down payment percentage
- Estimate monthly rental income, which can be tracked using a rent roll template, and recurring operating expenses.
- Set the expected holding period and market appreciation assumptions, often informed by a housing market analysis template.
- Review the calculated Total ROI and Annualized ROI in the bottom right section
Who this Real Estate ROI Calculator is for
- Real estate investors analyzing potential rental properties
- Property managers forecasting long-term asset performance
- Real estate agents presenting investment scenarios to clients
- Financial planners helping clients evaluate real estate portfolio additions using an investment tracking spreadsheet.
Use Quadratic to do Real Estate ROI Analysis
- Streamline investment property analysis on a single sheet.
- Instantly update financial metrics based on financing and operating assumptions.
- Calculate immediate cash requirements and long-term profit projections.
- Avoid complex SQL queries or cumbersome multi-sheet navigation.
- Evaluate total project cost, net operating income, and annualized ROI in one view.
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