Real Estate Analysis – Investment Property Calculator blog
Info about Real Estate Analysis and Real Estate Investment Software

Of recent, there has been a steady growth in the number of home sellers choosing the FSBO method of home selling – no thanks to the spike in the number of unqualified Realtors and the nefarious activities of some. Selling your home has never been as easy as it is now. Thanks to improved technology, you do not need the services of a real estate agent. Read more »

Arguably, realtors and real estate agents are the most demanding profession that requires a high level of thoroughness and professionalism. A typical day in the life of a real estate agent or realtor involves paying close attention to the workings of the real estate market, having to work with buyers request no matter how outrageous it seems – including having to deal with clients that want a hilltop residence on a $4000 budget – and lots more. Realtors are also faced with having to accurately valuate, forecast and determine the best possible price for a property within a given area. This is tiring no doubt but thanks to the ingenuity of a seasoned realtor, all these can be done with a single click on the “application for the future” the ZILCULATOR.

Our software – zilculator, has been made specifically to fit the need of homebuyers, investors, and realtors to make an informed investment decision both for now and the future.

I will walk you through how our real estate investment software features can be of help to you and its advantage to your business. Read more »

Popular manually edited website directory DMOZ is shutting down on March 14th, just in two weeks from now. This was announced last night on their homepage. Many real estate agencies or property management companies have been using this directory, mainly for the reason of its high authority considered by google. If you wanted to get on the first page of google, DMOZ was a necessary Search engine optimization technique.

After Yahoo directory shutting down in 2014, this was the last manually edited directory out there. It’s not known yet if there will be some other directory used in the future and how this will change search positions of the real estate companies listed in DMOZ directory, after the March 14th. I guess we can expect some changes on the first page of google search.

Real Estate Analysis FREE site existed for almost 7 years, and thousands of users registered and used it over the years, analyzed tens of thousands of properties and saved probably hundreds of thousands of dollars on smarter investment decisions.

As time passed, however, I came to see that RealEstateAnalysisFREE was starting to appear obsolete. Not just its design, but in general it wasn’t up to modern standards of web development – not compatible with mobile devices, unresponsive, and not so user friendly anymore. What’s more, many of you were asking me for new features – you wanted to customize the reports with your own logo and company address, you asked me for multi-family/commercial real estate support and even fix- and flip-calculations. I heard your needs, gathered and collected all of your requests, and from this information, decided to develop a brand new version from scratch, using the most modern standards available. I devoted hundreds of hours of my free time to the development throughout the past 2 years. I am confident it was worth it. I am still motivated by and enjoy the development process. But, most importantly, I am excited now to show you the new version, finally!

Read more »

Economically the most accurate method of calculating optimal holding period is based on net present value. We can calculate NPV of the investment, when it would be hypothetically sold in each year – starting from year 1 going till, for example, year 30. Then the highest NPV is chosen from these 30 values and the according year will be the optimal holding period. Since it is calculated from NPV, it takes in account the time value of money and is counted with Cash Flow after taxes. Sometimes the optimal holding period is shorter than the length of the mortgage and the reason is the shortening tax shelter, due to a smaller interest part of the mortgage payments every year. In the first years of mortgage, most of the mortgage payment is an interest payment with small principal payment and since the interest part is tax deductible, it creates higher tax shelter.

Another method for estimating a holding period is using return on equity calculated for every year. When the return on equity starts to decline, it can be a good point for resale. This method is simpler; however it does not count with the time value of money and depends significantly on the estimated appreciation. Therefore it is not very exact.

Both of these methods use estimation for future market conditions and therefore might not work correctly if the market is unpredictably changing in certain times. Therefore they should not be used as the only decision for selling a property, more as supportive information.

Return on investment (ROI) is one of the very popular measurements, because it usually presents very high percentages. However it does not take in account time value of money, and it does take in count some assumptions such as appreciation.

Gross rental yield is one of the simpler calculations and can be used for a particular property or also as a market indicator when using median values of rent and house prices. It is counted from gross scheduled rent and initial investment which includes purchase price of the property and closing fees.

Gross rent multiplier is usually used for estimating the market value of the investment property. It is used when comparing properties in a similar area and of a similar type. It is assuming that when somebody has recently paid for example 8 times the gross scheduled income as a price for certain property, then the market value of a similar property, the investor is considering, should also be 8 times its gross scheduled income. This method is not very accurate, nor takes in count time value of money. It is advised to use it only as a simple benchmark, possible when comparing multiple properties between each other.

Return on equity is one of the financial measures used as well on other types of investments. In Real Estate analysis the return on equity means a ratio between cash flow after taxes (CFAT) and the initial investment. ROE is calculated for the first year typically and is expressed as a percentage. It is advisable to calculate this measurement for other years as well, and in case of its increasing decline over the time, resale of the property can be evaluated.

Cash on cash return is in fact equity dividend rate. It is a ratio between annual cash flow before taxes and the total initial investment, expressed as a percentage. It is not an exact measurement of an investment, because it does not take in account the future value of money. However if it is used with the expected cash flow of the first year of ownership, it can at least give a first idea about the investment and an easy comparison to other types of investments, but definitely it should not be the main comparison measurement, as it is presented in many popular investment publications.