Real estate investing has been a common method of making money since the Middle Ages, with land ownership being seen as a symbol of wealth. Back then, real estate buyers didn’t have Internet access to make it easier to manage their investments, but we do now.
Whether you have an investment property or an entire portfolio, here are some of the many online tools that could make your investing activities much more manageable.
Ceiling rate calculator
A capitalization rate, or capitalization rate, tells investors the rate of return they can expect to generate on their real estate investment. Although you can calculate it manually, there is a simple online tool where you can enter your expenses.
It then generates a capitalization rate by dividing your net operating income by the property’s current value as a percentage. Investors often use a capitalization rate calculator to calculate their potential returns and to compare similar real estate investments.
Discounted cash flow calculator
Investors use discounted cash flow (DCF) to estimate the value of their investment today based on its future cash flows. If the DCF figure is higher than the current cost of the investment, it could be a good buying opportunity.
While using such a calculator is a quick and easy way for investors to make an informed decision, it is not always accurate. Your future cash flow determines the results, which no one can predict with absolute precision.
Weighted average cost of capital calculator
Analysts and investors use the weighted average cost of capital (WACC) formula to assess the return on their investments in a company. Many companies use borrowed funds to operate, which means that the cost of capital is crucial in determining the potential for net profitability of companies.
A WACC calculator allows you to measure your business’s cost of borrowing, with its formula using debt and equity in the calculation. It multiplies the cost and equity of your debt by its weight by market value to get the total. Many investors use the WACC to see if an investment is worth pursuing.
Online Property Finders
While many investors have relationships that allow them to learn about properties for sale before they are even listed, it can be beneficial to have online property search tools bookmarked in your search engine. research. These tools allow you to to diversify and keep your market knowledge up to date as you can learn about new listings, area demographics, school ratings, weather conditions, property features, and more.
There are many different websites that offer this information, so keep a few in mind when you want to refresh your market knowledge.
Net present value rule
Use a line net present value rule tool, you can calculate the present value of future net cash flows from your real estate investment. Discount your future cash flows based on the desired rate of return and deduct the value of your capital investment or cash amount. If the net present value is positive, it means that the investment may be worth it.
There are many online tools available to real estate investors to help them make informed property buying decisions. Rather than buying on a hunch, devote time and thought to the calculations to be as sure as possible with your decision. Online tools are making things easier than ever.