Some real estate expenses are more difficult to calculate than others. Net cash flow is not as simple as one might expect based on adding revenue and subtracting expenses. Once one feels comfortable with revenue and expense projections for a self-determined number of years, these revenue and expenses projections must be used each year to calculate a net cash flow number from the property.
How one chooses to make real estate projections is based on a person to person preference, but our rental property calculator simply makes these projection by assigning separate annual growth rates to revenue and expenses from your current rental income(revenue) and expenses. The present value of future cash flows can be projected as far into the future as you choose but our rental property calculator, is able to project NPV 30 years into the future. As with any calculation, the calculation is only as good as the data going into it. This is the first challenge with this calculation.the future must be estimated or projected. It is a calculation that calculates the present value of your NET future cash flows from real estate property investing.
Net present value is really exactly what it sounds like.
#Future rent money software#
NPV of future cash flows is certainly not a calculation that can be done on the back of a napkin, but if you understand how it works, it will better equip you to use net present value software or for the more advanced finance minds, even an excel spreadsheet.
Net present value of future cash flows in real estate is one of the many calculations that one can make in order to differentiate between competing real estate investments. Calculating Net Present Value For Rental Property