How to Calculate Numbers on a Rental Property

Discover our straight-forward and easy to use formula for calculating the numbers on a prospective rental property purchase.

Welcome to Hipster’s first how-to video! I’m going to show you how to run quick numbers on a rental property. You can use this easy and fast formula for any property you’re looking at. I’ll be behind the scenes doing the calculations on my white board and calculator (yes, it really is that big!) to show you how it works. This is an actual rental property I’m using as an example, including the actual purchase price and numbers. (You have to love my handwriting!) You always want to verify the numbers you run before you buy any property (for example, with a property manager), but it helps to do your homework first. This particular house is in Indianapolis and gets $1,075 in rent. It was built in 2002. Super cute little house: three bedroom, two bath. But all we care about right now is the numbers…

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20 Responses to How to Calculate Numbers on a Rental Property

  1. Patricia Luna

    In my experience there are decent properties that cost 65,000 but the property taxes are close to 3000

  2. Ilse Tiburcio

    Great Video – easy to follow.
    I have a mortgage being paid off, need 13 more years. If I buy another propert to rent, with a loan, what do I do with the profit? Use it to pay my property or pay the rental property?

  3. Jim Schubes

    Super helpful, very detailed. If you want to get the Cap rate QUICKLY for any property you can go to this cap rate calculator

  4. PM X

    I understand you are trying to be helpful, but the video is very misleading because it does not take into account capital expenditures (CAPEX). Without accounting for CAPEX, you might end up losing money. But you are in the business of selling turn keys and need to show higher cap rate to your investors, so the CAPEX is conveniently ignored.

  5. Eric Surprenant

    It is that large ; )

  6. william tyndall

    Don't forget the equity your building each year.  Its actually more than 14% return. Also there is the property appreciation for both situations. These numbers are not unrealistic. You just have to be patient and not pay too much.

  7. no body

    I'm in. where do I apply?

  8. Abc 123

    How do I get a value of a house I want to purchase? Who would I contact? A realtor, home inspector, someone else?

  9. Brian Arnold

    what moron rents a 100k house for a 1k a month?!? Hippies suck.

  10. Will P

    How do you factor in a HELOC as a down payment? I would want the principle and interest of both loans to be covered by the rental income.

  11. KuningaPower

    who the fuck pays 1100 for 100k property. You can get max 500-700 from that imo

  12. Lisaxplore

    I can't decide if it's better to invest 25% down on 6-8 properties or buy 2 or 3 out right.

  13. Don Powell

    can't you require tenant to have their own renters insurance?

  14. Crackled

    So you go to a property manager and ask them to calculate rent on a place you don't know own and they will do that? Is that how you find out the rent estimate??? Thanks for the video btw great help!

  15. Kevin Edwards

    Wow…. awesome what's your contact information?

  16. Von Banks

    What about carrying cost?

  17. Glenn Graham

    You're a smart girl and I'd like to marry you

  18. Albert Hernandez

    Love the technical video. People complaining about the unrealistic numbers. Just change the numbers to fit your local 'realistic' market you cry babies. The important thing is the step by step calculation. Thanks for the great video. Subbed.

  19. Ilse Tiburcio

    Very simplistic video – thank you. In a mortgage case, what would you do with the income? Use it for another property or put it towards paying the property off?

  20. GB MusicCompany

    Dope video!