There are several features that let you modify the resulting figures to tailor them to parameters
that you choose:
The 50% Rule feature allows you to automatically assign a Maintenance Reserve value according to
the 50% Rule. (The 50% Rule is a rule of thumb used by some investors. It is based on the idea that
in the U.S., landlords report that, on average, approximately 50% of scheduled income is eaten up by
expenses. Some seasoned investors place a lot of faith in this rule, others do not. In some areas
of the country, it is impossible to find a property that will meet this rule. In others, it's fairly
commonplace. The REI Program provides the feature should you want to use it, but we offer no opinion
on its validity.) In order to see how your investment stacks up against the 50% Rule, simply click
the Apply 50% Rule button. Your results will automatically change to reflect the application of the
Alternatively, you can choose to manually designate an amount to set aside for reserve each month.
To do this, simply enter the amount you would like to be set aside each month, and click the Apply
Maintenance button. Note: The 50% Rule feature and the Apply Manual Maintenance
feature are mutually exclusive. Choosing one automatically cancels out the other.
The 'What-If' feature allows you to change your income and/or your individual expense amounts on
the fly, right there on the Analysis Results Window. Clicking the What-If button causes the editable
cells to turn yellow. Clicking in any of these cells will make them editable. Once you edit a cell
and tab or click away from the cell, all values are recalculated and changed accordingly.
You can click the 'Reset Data' button to remove your What-If changes and put things back the way
Of course, clicking the Print button causes a Print Preview window to appear containing the contents
of the grid, from which you can subsequently send the results to a printer.
Scheduled Gross Income: The amount of rent you will receive per year, assuming
no vacancies, no evictions, no late payments -- in other words, don't hold your breath!
Vacancy Rate: The amount you are likely lose to vacancies during the year
based on the vacancy rate you entered in the Income and Expenses Window.
Vacancy Fill Cost: The amount it is likely to cost you to replace tenants
during the year based on the data you entered in the Property Management Window.
Property Management Cost: The amount you are likely to spend on property
management during the year, based on the percentage you entered in the Property Management Window, calculated against your scheduled gross rent minus vacancy rate.
Operating Expenses: The total of all expense items listed in the Income
and Expenses Window.
Total Expenses: Total Vacancy Cost + Property
Management Cost + Operating Expenses
Net Operating Income: Scheduled Gross Income - Total
Expenses (Expenses may optionally include a maintenance reserve, which can either be entered
manually or according to the 50% Rule.)
Annual Debt Service: The total amount that goes towards paying mortgages /
loans during the year.
Annual Cash Flow: Net Operating Income - Annual Debt
Cash Flow Per Unit: Cash Flow / Number of Units
Monthly Rent / Purchase Price (2% Rule): The 2% Rule is a rule of thumb
that says your monthly rent divided by the purchase price of the property should ideally be 2% or
Gross Rent Multiplier (GRM): Equal to the purchase price divided by
scheduled gross income.
Return On Investment (ROI): The percentage of your
initial cash outlay that you are likely to earn each year. (If your entire
purchase and initial costs are financed, meaning you had zero cash outlay, your ROI will be Infinity.)
Capitalization Rate (CAP): Net Operating Income (after Maintenance Reserve)
divided by purchase price.