Is it time to sell?

Most properties are purchased as leveraged investments. The investor uses a combination of cash and borrowed money to buy an income producing property. A ratio of 20% cash to 80% borrowed money is generally considered best practice. The equity (cash) portion of the investment can be expected to increase over time. A combination of inflation, improvements and principal reduction can increase the cash portion of the investment. This may reduce the tax benefits of the investment and its cash on cash performance. The following calculator can be used to analyze the current cap rate and cash on cash values for a property.

Monthly Rent Enter the total monthly rent you receive
Gross Annual Income Calculated as monthly rent * 12
Other Income Enter the annual amount of any other income (e.g. Laundry)
Total Gross Calculated as the annual rent plus other income.
Vacancy % Estimate a value for expected vacancies (5% is typical)
Amortized Costs Estimate an annual amortized value for repairs and capital improvements (e.g. a $10,000 roof amortized over 10 years = $1,000)
Maintenance Enter the amount spent on routine maintenance this year.
Utilities Enter the amount spent on utilities this year.
Property Taxes Enter the annual property tax amount for the building.
Insurance Enter the annual property insurance premium.
Management Fees Enter the cost of management fees
Net Operating Income Calculated as the annual gross income minus expenses
Market Value Enter the current market value and leave the CAP Rate blank to calculate the CAP Rate
Net Equity Estimate your total net equity including the original down payment and principal reduction
CAP Rate Enter a CAP Rate and leave the purchase price blank to calulate the property value