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
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 homeowner’s 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 item’s 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 broker’s 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
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.