return on investment is...
as it is not profitable.
The calculator keeps a running tally of the most common expenses of owning and property management fees. The calculator assumes that the profit you would have made would be taxed as long-term capital gains and adjusts the bottom line accordingly. The calculator tabulates property management costs costs for all parts of the buying and renting situations. All figures are in current dollars.
Initial costs are the costs you incur when you go to the closing for the home you are purchasing. This includes the down payment and other fees.
Recurring costs are expenses you will have to pay monthly or yearly in owning your home. These include mortgage payments, condo fees (or other community living fees), maintenance and renovation costs, property taxes and homeowners insurance. Property taxes, the interest part of the mortgage payment and, in some cases, a portion of the common charges are tax deductible. The resulting tax savings is accounted for in each items totals. The mortgage payment amount increases each year for the term of the loan because the tax credit shrinks each year as the interest portion of the payments becomes smaller.
Net proceeds is the amount of money you receive from the sale of your home minus the closing costs, which includes the brokers commission and other fees, the remaining principal balance that you pay to your mortgage bank and any tax you have to pay on profit that exceeds your capital gains exclusion. If your total is positive, it means you have done very well: You made enough of a profit that it covered not only the cost of your home, but also all of your recurring expenses.
Gross Rental Income is the amount of money you will receive from the estimated occupancy rate multiplied by the daily rental rate compounded yearly with the rent growth rate.
Property Management Fees are the expenses you will have to pay to market your home, maintain it, and manage renters.
Grand Total is the sum of the net income from selling the property plus then net income from renting it out over the life of the investment.