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1 | https://earlyretirementnow.com/2017/11/15/that-house-over-there-is-an-investment/ | ||||||||||||||||||||||||||
2 | EarlyRetirementNow.com: Housing IRR calculation | ||||||||||||||||||||||||||
3 | Enter numbers in the fields marked in Orange | Main Results | Year 1 Cash-on-Cash Return | Incorrect Calculation a la Millenial-Revolution | |||||||||||||||||||||||
4 | IRR | 33.03% | Outflows | $48,187.72 | Sales Price | $1,473,946.06 | |||||||||||||||||||||
5 | House | $320,000.00 | Total Net Flow | $1,850,215.16 | Purchase | $23,200.00 | - Commissions | $84,267.03 | |||||||||||||||||||
6 | Rental Yield (p.a.) | 7.31% | Financing | $17,499.72 | - Cost | $440,848.10 | |||||||||||||||||||||
7 | Monthly rent | $1,950.00 | Net Operating Income in Year 1 | Other costs | $7,488.00 | + rental aptm | $669,700.84 | ||||||||||||||||||||
8 | + Rental Income | $23,400.00 | Net Income | $23,719.17 | Net | $1,618,531.77 | |||||||||||||||||||||
9 | Mortgage | $300,000.00 | - vacancies | $0.00 (duh!!!) | Rental | $23,400.00 | Purchase Price | $320,000.00 | |||||||||||||||||||
10 | LTV | 88% | - Taxes | $3,008.00 | + Appreciation | $20,160.00 | Gain/Loss | $1,298,531.77 | |||||||||||||||||||
11 | Term | 30 | - Insurance | $640.00 | + Principal | $5,146.89 | % Annualized | 6.70% | |||||||||||||||||||
12 | Rate | 4.150% | - Maint./Repairs | $3,840.00 | - Mortgage | $17,499.72 | Using a much smaller rental unit for comparison (half the rent). | ||||||||||||||||||||
13 | PMT | $1,458.31 | Total NOI | $15,912.00 | - Cost | $7,488.00 | |||||||||||||||||||||
14 | Cap Rate | 4.97% | Year 1 ConC % | 49.22% | |||||||||||||||||||||||
15 | T-Cost | Percent | Dollars | Note: this is on the unleveraged asset | Note: This doesn't include T-cost when selling or tax deductions | ||||||||||||||||||||||
16 | At closing | 1.00% | $3,200.00 | ||||||||||||||||||||||||
17 | When Selling | 5.50% | $81,067.03 | ||||||||||||||||||||||||
18 | |||||||||||||||||||||||||||
19 | Sell after X months | 300 | (max 360 months) | ||||||||||||||||||||||||
20 | |||||||||||||||||||||||||||
21 | Other Costs | Percent | Dollars | Monthly | |||||||||||||||||||||||
22 | Taxes | 0.94% | $3,008.00 | $250.67 | |||||||||||||||||||||||
23 | Insurance | 0.002 | $640.00 | $53.33 | |||||||||||||||||||||||
24 | Maintenance, repairs | 1.20% | $3,840.00 | $320.00 | |||||||||||||||||||||||
25 | |||||||||||||||||||||||||||
26 | Home Appreciation | 6.3000% | (all flow variables, e.g., rent, property tax, insurance will increase at this same rate!) | ||||||||||||||||||||||||
27 | mothly | 0.5104% | |||||||||||||||||||||||||
28 | |||||||||||||||||||||||||||
29 | Marginal Tax Rate | 25.0% | (federal and state) | ||||||||||||||||||||||||
30 | % of interest deductible | 100.0% | |||||||||||||||||||||||||
31 | % of property tax deductible | 100.0% | (e.g. set to 0 if subject to AMT) | ||||||||||||||||||||||||
32 | |||||||||||||||||||||||||||
33 | |||||||||||||||||||||||||||
34 | Calculations: | ||||||||||||||||||||||||||
35 | Month | Cash Flows | Levels | Aux Variables | |||||||||||||||||||||||
36 | Home Transaction | Fees | Cost | Mortgage | Implicit Income (rent) | Tax advantage | Total CF | Home Value | Mortgage | Interest | Taxes | Sell Home indicator | |||||||||||||||
37 | 0 | -$20,000.00 | -$3,200.00 | $1,950.00 | -$21,250.00 | $320,000.00 | $300,000.00 | 0 | |||||||||||||||||||
38 | 1 | $0.00 | $0.00 | -$624.00 | -$1,458.31 | $1,950.00 | $322.04 | $189.73 | $321,633.36 | $299,579.19 | $1,037.50 | $250.67 | 0 | ||||||||||||||
39 | 2 | $0.00 | $0.00 | -$627.19 | -$1,458.31 | $1,950.00 | $322.00 | $186.50 | $323,275.05 | $299,156.92 | $1,036.04 | $251.95 | 0 | ||||||||||||||
40 | 3 | $0.00 | $0.00 | -$630.39 | -$1,458.31 | $1,950.00 | $321.95 | $183.26 | $324,925.12 | $298,733.20 | $1,034.58 | $253.23 | 0 | ||||||||||||||
41 | 4 | $0.00 | $0.00 | -$633.60 | -$1,458.31 | $1,950.00 | $321.91 | $180.00 | $326,583.62 | $298,308.01 | $1,033.12 | $254.52 | 0 | ||||||||||||||
42 | 5 | $0.00 | $0.00 | -$636.84 | -$1,458.31 | $1,950.00 | $321.87 | $176.72 | $328,250.58 | $297,881.35 | $1,031.65 | $255.82 | 0 | ||||||||||||||
43 | 6 | $0.00 | $0.00 | -$640.09 | -$1,458.31 | $1,950.00 | $321.83 | $173.43 | $329,926.05 | $297,453.21 | $1,030.17 | $257.13 | 0 | ||||||||||||||
44 | 7 | $0.00 | $0.00 | -$643.36 | -$1,458.31 | $1,950.00 | $321.78 | $170.12 | $331,610.07 | $297,023.59 | $1,028.69 | $258.44 | 0 | ||||||||||||||
45 | 8 | $0.00 | $0.00 | -$646.64 | -$1,458.31 | $1,950.00 | $321.74 | $166.79 | $333,302.69 | $296,592.49 | $1,027.21 | $259.76 | 0 | ||||||||||||||
46 | 9 | $0.00 | $0.00 | -$649.94 | -$1,458.31 | $1,950.00 | $321.70 | $163.45 | $335,003.95 | $296,159.89 | $1,025.72 | $261.09 | 0 | ||||||||||||||
47 | 10 | $0.00 | $0.00 | -$653.26 | -$1,458.31 | $1,950.00 | $321.66 | $160.09 | $336,713.89 | $295,725.80 | $1,024.22 | $262.42 | 0 | ||||||||||||||
48 | 11 | $0.00 | $0.00 | -$656.59 | -$1,458.31 | $1,950.00 | $321.62 | $156.72 | $338,432.56 | $295,290.21 | $1,022.72 | $263.76 | 0 | ||||||||||||||
49 | 12 | $0.00 | $0.00 | -$659.94 | -$1,458.31 | $2,072.85 | $321.58 | $276.18 | $340,160.00 | $294,853.11 | $1,021.21 | $265.11 | 0 | ||||||||||||||
50 | 13 | $0.00 | $0.00 | -$663.31 | -$1,458.31 | $2,072.85 | $321.54 | $272.77 | $341,896.26 | $294,414.50 | $1,019.70 | $266.46 | 0 | ||||||||||||||
51 | 14 | $0.00 | $0.00 | -$666.70 | -$1,458.31 | $2,072.85 | $321.50 | $269.34 | $343,641.38 | $293,974.38 | $1,018.18 | $267.82 | 0 | ||||||||||||||
52 | 15 | $0.00 | $0.00 | -$670.10 | -$1,458.31 | $2,072.85 | $321.46 | $265.90 | $345,395.41 | $293,532.73 | $1,016.66 | $269.19 | 0 | ||||||||||||||
53 | 16 | $0.00 | $0.00 | -$673.52 | -$1,458.31 | $2,072.85 | $321.42 | $262.44 | $347,158.39 | $293,089.55 | $1,015.13 | $270.56 | 0 | ||||||||||||||
54 | 17 | $0.00 | $0.00 | -$676.96 | -$1,458.31 | $2,072.85 | $321.39 | $258.97 | $348,930.37 | $292,644.85 | $1,013.60 | $271.94 | 0 | ||||||||||||||
55 | 18 | $0.00 | $0.00 | -$680.41 | -$1,458.31 | $2,072.85 | $321.35 | $255.47 | $350,711.39 | $292,198.60 | $1,012.06 | $273.33 | 0 | ||||||||||||||
56 | 19 | $0.00 | $0.00 | -$683.89 | -$1,458.31 | $2,072.85 | $321.31 | $251.96 | $352,501.51 | $291,750.81 | $1,010.52 | $274.72 | 0 | ||||||||||||||
57 | 20 | $0.00 | $0.00 | -$687.38 | -$1,458.31 | $2,072.85 | $321.27 | $248.44 | $354,300.76 | $291,301.47 | $1,008.97 | $276.13 | 0 | ||||||||||||||
58 | 21 | $0.00 | $0.00 | -$690.89 | -$1,458.31 | $2,072.85 | $321.24 | $244.89 | $356,109.20 | $290,850.58 | $1,007.42 | $277.54 | 0 | ||||||||||||||
59 | 22 | $0.00 | $0.00 | -$694.41 | -$1,458.31 | $2,072.85 | $321.20 | $241.33 | $357,926.87 | $290,398.13 | $1,005.86 | $278.95 | 0 | ||||||||||||||
60 | 23 | $0.00 | $0.00 | -$697.96 | -$1,458.31 | $2,072.85 | $321.17 | $237.75 | $359,753.81 | $289,944.11 | $1,004.29 | $280.38 | 0 | ||||||||||||||
61 | 24 | $0.00 | $0.00 | -$701.52 | -$1,458.31 | $2,203.44 | $321.13 | $364.74 | $361,590.08 | $289,488.52 | $1,002.72 | $281.81 | 0 | ||||||||||||||
62 | 25 | $0.00 | $0.00 | -$705.10 | -$1,458.31 | $2,203.44 | $321.10 | $361.13 | $363,435.72 | $289,031.36 | $1,001.15 | $283.25 | 0 | ||||||||||||||
63 | 26 | $0.00 | $0.00 | -$708.70 | -$1,458.31 | $2,203.44 | $321.06 | $357.49 | $365,290.79 | $288,572.62 | $999.57 | $284.69 | 0 | ||||||||||||||
64 | 27 | $0.00 | $0.00 | -$712.32 | -$1,458.31 | $2,203.44 | $321.03 | $353.84 | $367,155.32 | $288,112.29 | $997.98 | $286.14 | 0 | ||||||||||||||
65 | 28 | $0.00 | $0.00 | -$715.95 | -$1,458.31 | $2,203.44 | $321.00 | $350.18 | $369,029.37 | $287,650.37 | $996.39 | $287.60 | 0 | ||||||||||||||
66 | 29 | $0.00 | $0.00 | -$719.61 | -$1,458.31 | $2,203.44 | $320.97 | $346.49 | $370,912.98 | $287,186.85 | $994.79 | $289.07 | 0 | ||||||||||||||
67 | 30 | $0.00 | $0.00 | -$723.28 | -$1,458.31 | $2,203.44 | $320.93 | $342.78 | $372,806.21 | $286,721.73 | $993.19 | $290.55 | 0 | ||||||||||||||
68 | 31 | $0.00 | $0.00 | -$726.97 | -$1,458.31 | $2,203.44 | $320.90 | $339.06 | $374,709.10 | $286,254.99 | $991.58 | $292.03 | 0 | ||||||||||||||
69 | 32 | $0.00 | $0.00 | -$730.68 | -$1,458.31 | $2,203.44 | $320.87 | $335.32 | $376,621.71 | $285,786.65 | $989.97 | $293.52 | 0 | ||||||||||||||
70 | 33 | $0.00 | $0.00 | -$734.41 | -$1,458.31 | $2,203.44 | $320.84 | $331.56 | $378,544.08 | $285,316.69 | $988.35 | $295.02 | 0 | ||||||||||||||
71 | 34 | $0.00 | $0.00 | -$738.16 | -$1,458.31 | $2,203.44 | $320.81 | $327.78 | $380,476.26 | $284,845.10 | $986.72 | $296.53 | 0 | ||||||||||||||
72 | 35 | $0.00 | $0.00 | -$741.93 | -$1,458.31 | $2,203.44 | $320.78 | $323.98 | $382,418.30 | $284,371.88 | $985.09 | $298.04 | 0 | ||||||||||||||
73 | 36 | $0.00 | $0.00 | -$745.72 | -$1,458.31 | $2,342.26 | $320.75 | $458.98 | $384,370.26 | $283,897.02 | $983.45 | $299.56 | 0 | ||||||||||||||
74 | 37 | $0.00 | $0.00 | -$749.52 | -$1,458.31 | $2,342.26 | $320.73 | $455.15 | $386,332.17 | $283,420.52 | $981.81 | $301.09 | 0 | ||||||||||||||
75 | 38 | $0.00 | $0.00 | -$753.35 | -$1,458.31 | $2,342.26 | $320.70 | $451.30 | $388,304.11 | $282,942.37 | $980.16 | $302.63 | 0 | ||||||||||||||
76 | 39 | $0.00 | $0.00 | -$757.19 | -$1,458.31 | $2,342.26 | $320.67 | $447.42 | $390,286.10 | $282,462.57 | $978.51 | $304.17 | 0 | ||||||||||||||
77 | 40 | $0.00 | $0.00 | -$761.06 | -$1,458.31 | $2,342.26 | $320.64 | $443.53 | $392,278.22 | $281,981.11 | $976.85 | $305.72 | 0 | ||||||||||||||
78 | 41 | $0.00 | $0.00 | -$764.94 | -$1,458.31 | $2,342.26 | $320.62 | $439.62 | $394,280.50 | $281,497.98 | $975.18 | $307.28 | 0 | ||||||||||||||
79 | 42 | $0.00 | $0.00 | -$768.85 | -$1,458.31 | $2,342.26 | $320.59 | $435.69 | $396,293.00 | $281,013.19 | $973.51 | $308.85 | 0 | ||||||||||||||
80 | 43 | $0.00 | $0.00 | -$772.77 | -$1,458.31 | $2,342.26 | $320.57 | $431.74 | $398,315.78 | $280,526.72 | $971.84 | $310.43 | 0 | ||||||||||||||
81 | 44 | $0.00 | $0.00 | -$776.72 | -$1,458.31 | $2,342.26 | $320.54 | $427.77 | $400,348.88 | $280,038.56 | $970.15 | $312.01 | 0 | ||||||||||||||
82 | 45 | $0.00 | $0.00 | -$780.68 | -$1,458.31 | $2,342.26 | $320.52 | $423.78 | $402,392.35 | $279,548.72 | $968.47 | $313.61 | 0 | ||||||||||||||
83 | 46 | $0.00 | $0.00 | -$784.67 | -$1,458.31 | $2,342.26 | $320.49 | $419.78 | $404,446.26 | $279,057.18 | $966.77 | $315.21 | 0 | ||||||||||||||
84 | 47 | $0.00 | $0.00 | -$788.67 | -$1,458.31 | $2,342.26 | $320.47 | $415.75 | $406,510.65 | $278,563.94 | $965.07 | $316.82 | 0 | ||||||||||||||
85 | 48 | $0.00 | $0.00 | -$792.70 | -$1,458.31 | $2,489.82 | $320.45 | $559.26 | $408,585.58 | $278,069.00 | $963.37 | $318.43 | 0 | ||||||||||||||
86 | 49 | $0.00 | $0.00 | -$796.74 | -$1,458.31 | $2,489.82 | $320.43 | $555.20 | $410,671.10 | $277,572.35 | $961.66 | $320.06 | 0 | ||||||||||||||
87 | 50 | $0.00 | $0.00 | -$800.81 | -$1,458.31 | $2,489.82 | $320.41 | $551.11 | $412,767.26 | $277,073.97 | $959.94 | $321.69 | 0 | ||||||||||||||
88 | 51 | $0.00 | $0.00 | -$804.90 | -$1,458.31 | $2,489.82 | $320.39 | $547.00 | $414,874.13 | $276,573.88 | $958.21 | $323.33 | 0 | ||||||||||||||
89 | 52 | $0.00 | $0.00 | -$809.00 | -$1,458.31 | $2,489.82 | $320.37 | $542.87 | $416,991.75 | $276,072.05 | $956.48 | $324.98 | 0 | ||||||||||||||
90 | 53 | $0.00 | $0.00 | -$813.13 | -$1,458.31 | $2,489.82 | $320.35 | $538.72 | $419,120.17 | $275,568.49 | $954.75 | $326.64 | 0 | ||||||||||||||
91 | 54 | $0.00 | $0.00 | -$817.28 | -$1,458.31 | $2,489.82 | $320.33 | $534.55 | $421,259.46 | $275,063.19 | $953.01 | $328.31 | 0 | ||||||||||||||
92 | 55 | $0.00 | $0.00 | -$821.46 | -$1,458.31 | $2,489.82 | $320.31 | $530.36 | $423,409.67 | $274,556.14 | $951.26 | $329.99 | 0 | ||||||||||||||
93 | 56 | $0.00 | $0.00 | -$825.65 | -$1,458.31 | $2,489.82 | $320.29 | $526.15 | $425,570.86 | $274,047.34 | $949.51 | $331.67 | 0 | ||||||||||||||
94 | 57 | $0.00 | $0.00 | -$829.86 | -$1,458.31 | $2,489.82 | $320.28 | $521.92 | $427,743.07 | $273,536.77 | $947.75 | $333.36 | 0 | ||||||||||||||
95 | 58 | $0.00 | $0.00 | -$834.10 | -$1,458.31 | $2,489.82 | $320.26 | $517.67 | $429,926.38 | $273,024.44 | $945.98 | $335.07 | 0 | ||||||||||||||
96 | 59 | $0.00 | $0.00 | -$838.36 | -$1,458.31 | $2,489.82 | $320.25 | $513.40 | $432,120.82 | $272,510.34 | $944.21 | $336.78 | 0 | ||||||||||||||
97 | 60 | $0.00 | $0.00 | -$842.64 | -$1,458.31 | $2,646.68 | $320.23 | $665.96 | $434,326.47 | $271,994.47 | $942.43 | $338.49 | 0 | ||||||||||||||
98 | 61 | $0.00 | $0.00 | -$846.94 | -$1,458.31 | $2,646.68 | $320.22 | $661.65 | $436,543.38 | $271,476.80 | $940.65 | $340.22 | 0 | ||||||||||||||
99 | 62 | $0.00 | $0.00 | -$851.26 | -$1,458.31 | $2,646.68 | $320.20 | $657.31 | $438,771.60 | $270,957.35 | $938.86 | $341.96 | 0 | ||||||||||||||
100 | 63 | $0.00 | $0.00 | -$855.60 | -$1,458.31 | $2,646.68 | $320.19 | $652.95 | $441,011.20 | $270,436.10 | $937.06 | $343.70 | 0 | ||||||||||||||